Real estate capital markets are undergoing a tremendous transformation, with tried-and-true strategies no longer offering the opportunities they once did. Today’s guest, Brandon Sedloff, has a unique perspective on the changes afoot.
As Chief Real Estate Officer at investment management software platform Juniper Square, Sedloff has a special view of the real estate investment landscape. In today’s episode, he’ll share some of those insights and dig into the changes on the horizon.
This episode covers Juniper Square’s journey–where Sedloff was employee #5–as well as the state of the capital markets, evolutions in the investment management world, and advice for real estate sponsors hitting the fundraising trail.
Sedloff has a perspective unlike any other, so you won’t want to miss this conversation.
You can see the full description and transcript here or watch and listen on any of the following platforms:
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The following transcript is automatically generated. Please forgive us for any errors or misspellings.
Brad Hargreaves: [00:00:00] Hello and welcome to episode 16 of the Thesis Driven Leader Series. I'm Brad Hargraves, the founder and editor-in-Chief of Thesis Driven, and we're so excited to have all of you here listening in to this episode. Today we have Brandon Sedloff, the Chief Real Estate Officer at Juniper Square joining us for today's conversation. It's gonna be a wide ranging talk.
We're gonna hit on a lot of topics. First, a little bit about what Juniper Square is, because it's not a platform everybody knows and that's okay, but it is the investment management behemoth out there in the real estate world, and they've since expanded into alternatives and other types of investments, but their origins are in real estate. That's what they're known for. It's the real estate division of Juniper Square that Brandon runs.
What makes this unique and special is that Brandon, therefore, has a pretty unique view into what's going on in the broader real estate investment world - who's making investments, what's happening [00:01:00] in the capital markets, what concepts, ideas, GPs are having success and what aren't?
His seat being Chief Real Estate Officer over at Juniper Square gives him a unique perspective. He's also one of the most thoughtful people I've met in the broader real estate ecosystem, and part of that is he hosts one of my favorite real estate capital market shows. It's called The Distribution, and it digs into the capital markets. He has a lot of people on real estate investors, sponsors, folks who have a good lens into what's happening.
He was employee #5 at Juniper Square, so he's seen its journey into this investment management behemoth, and he's got this front row seat into what's happening in the capital markets right now. So we're gonna talk about the state of the markets and we're also gonna share some advice for GPs, sponsors, developers, people in the real estate world out there hitting the fundraising trAIl right now, what do investors want to hear? What [00:02:00] strategies are working and what are not?
Before we dive into that, I do wanna thank our sponsor that has made Season 2 of the Thesis Driven Leader Series possible that is Neutral. They are an awesome multifamily developer building institutional grade projects with mass timber that meet the industry's most rigorous sustAInability certifications like passive house, living building challenge lead, and energy star. By leveraging those sustAInability tax benefits, Neutral passes significant savings to investors, sometimes up to 60% of investment value in deductions, you can explore their investment offerings at Invest Neutral.us now.
I'm really excited to have Brandon on the show today. We're gonna hit a lot of topics. Let's dive in.
Brandon, welcome to the Thesis Driven Leader Series. So excited to have you on the show today.
Brandon Sedloff: I'm excited to be here. Thanks for having me, Brad.
Brad Hargreaves: So Juniper Square, let's just talk about your platform for a second, obviously built like the real estate investment management platform. What are your focus areas today and where are you looking to take it this year, next year?
Brandon Sedloff: [00:03:00] So first of all, I have to give credit where credit's due. I didn't build it, but there's been a great team of people who I've had the pleasure of working with for the last decade who have been building Juniper Square. The second thing that a lot of people don't know about the company is it looks like an overnight success.
But since 2014 when Alex Robinson founded the business, we've been really deliberate about marching towards this end goal of: how do you broaden access to private markets? What's really interesting about that is, 10 years ago, when I started at the company as the founding sales leader, if I would've said we have a solution that will help broaden access to private markets, people would've looked at me and said, you're crazy.
What are you talking about? I don't need access to private markets. What are private markets? I don't have a problem raising money necessarily, but what we found as the markets have changed is not only has the flow of capital shifted, but the composition of capital sources has changed.
A lot of institutional investment managers today are not only focused on continuing to raise money from their institutional capital partners, but they're looking at alternative channels down to private wealth.
When you think about Juniper Square and you think about this, this mission and this vision, which is how do you make [00:04:00] private markets more efficient? How do you broaden access to private markets? We started with real estate because real estate is one of the largest investible asset classes in the world. It's a great total addressable market for us as a company and it was one of the hardest problems to solve with the fewest people trying to solve the problem.
There's just a lot of complexity and nuance 'cause you have assets and those assets are often owned by SPVs or funds and those SPVs and funds have a lot of unique structures, so the modeling around financial reporting becomes very, very complicated in real estate. But today we actually support all the private markets.
Of our five largest clients globally, two of them are real estate investment managers, and three of them don't own any real estate at all. I am our chief real estate officer, but the reality is the company's working across private equity, across venture, across private credit infrastructure, natural resources, as well as real estate, which is by far our largest vertical, if you will.
It's an alternatives or private markets platform. A lot of people, I think Mark Rowan is from Apollo is trying to get all of us to move away from the word [00:05:00] alternatives to private markets. But yeah, it is private markets. We draw the line of hedge funds. We don't really support any hedge funds because of the public and and liquid side of their book.
So, you know, illiquid private markets companies.
Brad Hargreaves: Very cool. By the way, I agree with him that alternatives is a bad framing because it positions public equities in the center and all this other stuff as like weird frills to it. I happen to agree with him there. I will abide by that and shift public markets until I forget. So you have this embedded software in a lot of the top investment managers, I wanna talk a little bit about where you take that from here? I come from the tech world. I come from the venture world. I've been in there since 2005. In 2015, started working in real estate, making real estate investments on my own, building a real estate operating platform. One of the things I saw was that the world of real estate capital markets looks a lot like venture in 2005. It is super opaque. You know, the accelerators, the incubators, like all these like little parts of the ecosystem that exist in [00:06:00] tech just don't exist in real estate. To help emerging sponsors, managers find the right advanced investors, is this a problem that Juniper Square is looking to solve?
Brandon Sedloff: I think with the fullness of time, yes.
I mean, it goes into this mission that we talked about, which is how do you broaden access to private markets? But if you distill down some of the fundamental challenges of like why is it this way? Institutional real estate, as we know, it's only existed for a few decades, 20 to 40 years, depending on who you talk to.
So it's a pretty new investible asset class. I mean, 10, 15, 20 years ago, an institutional investor's allocation to real estate was low single digits. Today you're starting to get 10%, even up to 20% allocation to real estate in an institutional investor's portfolio, which is great, but it's still really, really nascent.
That doesn't even account for the trillions of capital in private wealth that has zero exposure to anything private, let alone real estate. And I think one of the reasons that private markets and real estate has been inaccessible is because of this opacity. The [00:07:00] opacity isn't because investment managers want to be secretive.
The opacity is because if you think about the composition of a typical real estate GP or real estate investment manager operating business, it's people who understand the market. It's people who are very entrepreneurial, people who are gritty, people who love to do deals, people who are comfortable raising money, structuring transactions.
And as a result, the markets have taken off and real estate's become more of a mainstream or institutional quality asset class. These companies have grown really quickly, and when you're growing really, really quickly and things are going really well, you tend to focus on what's your next deal, what's your next fund and you tend not to focus as much on your operational infrastructure. Well, that's great when it's early days and there's a first mover advantage, right? The first GPs out there needed to turn investors away because they didn't have the capacity to take on the capital and then deploy it. Now you've had this proliferation of investment managers come into the space.
There's so much more competition. The capital base has expanded, but not at the same rate of GPs, and so the game has [00:08:00] changed, where now it's not just about can you find the GP, but can you find the GP who has the ability to deliver alpha? When you talk about alpha, alpha has two components. There's the operational component and then there's the investment component.
Right now what we're seeing is the importance of decomposing performance. In order to decompose performance, you need to get really, really specific on the underlying transactions in the data. And historically that's always been in spreadsheets. And guess what? Spreadsheets are great, but they're not a source of truth and they're not good at automating things that happen the same way every time.
And so inside of a lot of these investment managers, things are breaking down. It's really hard for a GP to share their track record and to be able to give an investor the tools to decompose it. The same way that you can go to a public company and you can look at their performance and their financials and drill down and read their analyst research and everything else.
And as a result, it's a bit of a black box. When you don't know what you're investing into, it's really hard to increase your allocation to that thing unless the markets are ripping, in which case you could [00:09:00] argue it might not be the right time to invest anyway. We're seeing this shift towards more transparency, more structured data, more professionalization, moving away from a lot of ad hoc work to true systemized sources of truth for investment managers, and as a result, that's enabling them to increase their distribution, evolve their channels, so move into private wealth and educate people on, yeah, let me walk you through what we're doing. Why retail, why multifamily, why industrial's a great asset class, but more specifically, let me walk you through the returns and how we got there and being able to decompose that is really, really important.
It was never a will issue. Nobody ever said, oh no, no, I want to be opaque forever and it's by design. It was a skill issue and it was, do we have the right people? Do we have the right technology and systems? So Juniper Square helps solve one of those parts of the problem, which is, yes, the systems and the technology now exist. Now it's on the GP and the rest of the industry to evolve and change the way that we do things.
Brad Hargreaves: I think about like different ways the arc of the industry could have evolved. It [00:10:00] certainly felt like you go back 10 years, I feel like a lot of folks might have believed that the crowdfunding platforms were going to solve this. They're starting with retail capital. It's kind of small scale, but like eventually this is just going to create transparency between GPs and investors, whomever those investors might be. Why do you think the crowdfunding platforms didn't solve it?
Brandon Sedloff: It's a really interesting question and one that we've studied a lot. I don't think there's a definitive answer. It's just we all have opinions. One of the challenges with the crowdfunding model, historically, at least in the earliest days, was you have this adverse selection bias, right? You know, a, a lot of two-sided marketplaces have this, think about OpenTable, a technology that many of us use to make a restaurant reservation.
If you went to OpenTable and all you found was the crappiest restaurants with the least desirable times, you know, 10:00 PM and 4:00 PM, you're never gonna book those. Part of the issue is how do you get the highest quality GPs on your platform and then how do you get them to [00:11:00] share the information that you need from them to enable those investors to feel comfortable investing? When we saw the regulations change and crowdfunding took off a lot of the crowdfunding companies primary focus was first finding and building a network of LPs and then matching those LPs to the GPs.
From the beginning, we decided to take a very different track. We believe that, using the OpenTable analogy, that with the fullness of time, capital will flow. Our business model has always been how do we help GPs scale their business, structure their data, provide more transparency around their performance and their reporting? When you do that, in the process, they're putting their data onto your platform. They're trusting you to securely house it for them, but down the road, might there be a scenario where they can use the data on Juniper Square and Juniper Square can help articulate that data outward in a way where they could use it to find new investors.
That's a potential scenario that could exist. We don't have a product for that right now, but you can understand the [00:12:00] foundational element is the GP performance and track record information and the ability to share that easily with people who might want to consume it so that they can invest. Just a fundamental difference.
When we think about our business, we don't need to think about selling to investor or what an individual investor wants because we're solving problems for the GP that they have and they have their own investors, and those are their investor relationship. We want to make sure that as this landscape changes, whether a GP, whether crowdfunding takes off again and there's a resurgence, whether you're raising money through another intermediary, any of these tech enabled distribution platforms, whether you're raising money through RIAs, through wire houses, through pension fund consultants, Juniper Square's job is to be able to support the GP in raising money in this omnichannel world that we live in, because we think there's going to be a proliferation of channels that investment managers are going to need to tap into and going to need to support in order to run their businesses going forward.
Brad Hargreaves: I wanna go back to this question about the potential [00:13:00] resurgence of crowdfunding. I've had a number of conversations with good GPs over the past six months that have gone like this. These are not multifamily syndicators in Phoenix. These are legit GPs who have raised institutional capital, done good ground up multifamily deals, and they've said to me, Brad, my next fund, my next deal, I don't wanna do the partnership with big private equity with an institution. I wanna raise from family offices. I wanna raise from high net worth individuals because they're more agile. They don't ask for crazy control provisions. They'll let me charge the fees I want to charge. Do you think that's a broader trend? I'm just curious, is this data I'm hearing or are you seeing that kind of thing more broadly?
Brandon Sedloff: I think what we're seeing is everybody wants to tap into private wealth broadly. For some people that means family offices. For some people that means wealthy individuals. For some people that means advised accounts like through independent registered investment advisors.
There's a wide range, but the [00:14:00] pension market is not seen as a a viable concern for the long run. I mean the pension funds are gonna continue to invest insurance companies are continue to invest. Sovereign wealth funds will continue to invest, but at the other end of the market, it's increasingly hard for smaller emerging managers to be able to tap into the defined benefit, defined contribution space.
So as a result of that, what's happening is there's a forced shift towards non-institutional capital or private wealth broadly. The other dynamic that's happening, and you kind of subtly alluded to this, and I think it might be an underpinning, is these kind of quote unquote, private equity firms are often referred to as allocators.
I'm sure you know this, but in case your listeners don't, we see this all the time when I talk to investment managers say, well, what's the source of your capital? And they're like institutional, I said like, CalPERS or Calsters, they're like, no, like, allocator X or Y, you know whatever it is.
I don't wanna disparage any of our clients or friends in the industry. What they're actually saying is that they're raising [00:15:00] money from people who have raised money from the pension funds. The problem there is with real estate performance being pretty tepid in this last period of time, as interest rates are rising, these allocators are charging a fee to the pension fund and then the managers, the people you're talking about who wanna raise their next fund, are charging a fee to the allocator. So there's a double promote, which means in order for anybody to make money and real estate, your assets and funds need to be really outperforming. I think we all know that over the last several years, this last cycle, nobody's really been outperforming, which means the returns and the projections look pretty crappy, which means, you know, it's hard to source capital from those what I would call traditional sources.
So there is this massive shift happening, and I think what we're gonna see is the big investment managers, the Blackstones, the KKRs, the Apollos, the ones that we read about in the headlines, they're gonna continue to get bigger because they're safe. You write one, you write a check, you give it to one manager, they can do everything. They get you some alpha, they get you some beta. They're a diversifier. One throat to choke. That's where [00:16:00] the institutions are gonna play for the most part.
At the other end, you're gonna see some of these firms that you're talking to. They're smaller by design, they're more nimble, they're specialists, right? They're sector specialists, geography specialists. They have something that nobody else has. They're highly differentiated, and they're going to be successful as well because they're going to be seen as the true alpha generators in a world that could be more beta like. As a result, there's gonna be this bifurcation of the market where the middle, which I call the messy middle, is gonna get squeezed.
These smaller regional localized focused fund managers or operators are going to see more capital flow to them than they have in the past because they're ultimately able to deliver the returns that investors are expecting relative to the risk of real estate or private investments broadly.
Brad Hargreaves: It's super interesting. I was talking to someone just last week, who had a C-level role at a big brand name allocator. The way he put it was same outcome but a bit more about data. He looked at it and said, our firm, this big [00:17:00] allocator, well-known, great consumer brand. They also run a bunch of mutual funds.
They don't have the data to compete against Blackstone, Starwood, and real estate investment decisions are increasingly driven by data at scale, so they're not gonna compete there. They're not gonna compete for institutional, PRI pension, insurance, capital sovereign et cetera. So the only answer is, okay, get niche focus, but that requires scaling down. They don't wanna do that.
So what's gonna come of this messy middle of allocators? Is there a future for them?
Brandon Sedloff: I think there's two things happening right now. It's interesting. This is where I spend a lot of my time. I have a lot of ideas here. I don't think I have any answers, but I mean the trends that I see unfolding are, first, there's gonna be a lot of M&A.
In the last few weeks, we've heard of Apollo buying Bridge Housing, Barings buying Artemis. There's many more deals that have happened prior to that and there's many more deals in the pipeline that are yet to be announced. At the end of the day, those who have the balance sheet and the resources can acquire folks in the messy middle, but the data scale problem is real. They've gotta [00:18:00] figure it out. Right. They gotta figure out how to take all these disparate data sources from different companies and different verticals and different sectors, and merge it together to enable the data to tell a story, to be effective, to drive differentiated investment outcomes.
That's not a small feat to do it, but that's the thesis with some of the M&A deals going on. The other thing that will happen, and we're already starting to see it a little bit, is there's gonna be kind of a lot more investment at the kind of OpCo level, buying a minority stake in an investment manager and that's a way where these firms are gonna be able to leverage some of their industry knowledge, their institutional relationships, but instead of going directly to the asset where they don't have any of the skills, they're gonna actually buy some of the economics in the operating business so that they can participate in that recurring income stream.
My prediction is some brand name firms that everybody knows, everybody trusts simply cease to exist. There's really no assets to acquire that are valuable so those kind of dissolve. We actually just saw that with Lionstone. They got acquired a few years ago by Columbia Thread Needle and then [00:19:00] by Ameriprise and throughout that transaction a lot of the key staff left. As a result, the parent company, the new owner, decided to wind it down. They were a great company that is no longer a going concern. Right? They've wound it down. I wouldn't be surprised if we see more of that, but I think in this clearing out, I think it's gonna be healthy.
The barriers to entry in real estate over the last five years or 10 years kind of post GFC have been pretty low in a zero interest rate environment. You've got access to some capital, you understand the dynamics of your local market. You can do deals and a lot of people have done quite well, but this is a time where the going is tough. What we're gonna find is that the firms that have the best people have been market and cycle tested who have access to capital who are creating companies that have enterprise value, which is a pretty new and novel concept, meaning they're profitable, they're durable, they're more than just the individual who runs them. We're gonna see a lot of interesting firms emerge and do really, really well coming into the cycle that we're in now and over the next 10 years.
Brad Hargreaves: So let's talk about that access to [00:20:00] capital piece. So you're a high quality GP out there, maybe you're raising, deal by deal, maybe you're raising a small fund. How are you reaching the capital markets? Institutions are in many ways as closed as they've ever been. You're not going out to CrowdStreet like, what are you doing? How are you getting in front of the right capital for your model?
Brandon Sedloff: This is the billion dollar question, right?
There's another wrinkle here, or dynamic at play, which is even those who have been successful in raising capital through friends and family, through RIAs, through non-institutional channels are finding that those channels are really tapped out right now. You've got an investor and that investor's given you allocation because the markets have been so challenging.
You haven't been distributing a lot of money, so there's nothing to reinvest, which means one of two things needs to happen. One thing is you do nothing, or the second thing is you come out of your pocket, you take more of your savings, or you reallocate some of your investments from somewhere else and you put it into this asset class that has underperformed through the last period of time. This is the conundrum that a [00:21:00] lot of firms are in. We have a lot of clients who have gotten to a billion of equity. I mean, 1 billion of equity raised, deal by deal, investor by investor. These are legitimate businesses that are cycle tested. But guess what?
They don't have a path to go get the next billion, 'cause getting from zero to one is really hard. Getting from one to two, they don't know how to do it. That's why we're starting to see a lot more of these strategic capital firms exist. Staking firms or just generally strategic capital, where if you as an investment manager are willing to share some of the economics in your business, you're able to access capital right now, and you're able to access it in pretty decent sized chunk, $10 to $100 million dollar increments, which is really good working capital in this market environment where, yes, there's a lot of institutional capital in the sign line, but it's kind of stuck, right? There's not a lot of flexibility.
So there's this interesting arbitrage opportunity, but it's a interesting psychological exercise because now you're going to founders and principals who have poured their net worth, their blood, sweat, and tears into building this thing, and you're telling them, in order to [00:22:00] get it to the next stage, you gotta give up a big piece of the pie and that's a tough pill to swallow. And historically it was a hard, fast no, but what we're seeing right now is a lot of firms see the writing on the wall and they're saying, Hmm, actually maybe I should do that. Maybe I shouldn't think so ill of these strategic capital partners, they can actually help me.
They have something that I need, not only money, but operating expertise, discipline, governance, whatever it may be. This next cycle is gonna be more the repro professionalization of investment management, which is really exciting. And then, to your earlier question, I don't know. We still see, just anecdotally, which might be really interesting for your listeners, we have a digital subscriptions tool as part of Juniper Square. So you put your sub docs up and you can sign it all online and all the counterparties can sign to bring investors into your deal or your fund. We have 2,400 clients on the platform. I don't know what percent huge digital subs, maybe 50, 60%, actively use it.
And that's growing pretty quick. Each month we're seeing about a billion dollars of net inflow just through our digital subscriptions tool. So there is absolutely money out [00:23:00] there, and it's flowing in a billion dollars a month, and this isn't a billion that you're seeing in Quinn or PitchBook or any of the data.
This is a billion of non-institutional capital flowing into GPs every month. The problem is, it's the long tAIl. It's very disaggregated, so I can't tell you, oh, here's the honeypot. This is where to go to find it.
Brad Hargreaves: So let's talk about these strategic capital partners for a second. It's almost like we're, we're reinventing the allocator just in a very different formulation. Would you consider them late stage platform investors?
Brandon Sedloff: I mean, there there's different, you know, there there's different theses? Theses? Thesis Driven, you should know, probably know how to say the way better than I do. Some of them are willing to take a venture capital firm. Some of them are willing to go angel round, super early seed a company, build it up. Some want a little bit more business viability, a stable revenue stream coming from management fees off of the capital that's already been raised, and then they're looking for a vision of how you're gonna go raise your next fund or your next, next fund. So it is absolutely that and it's fascinating to watch.
Brad Hargreaves: It just reminds me so much once again of the tech ecosystem in [00:24:00] 2005 to 2011 or so. Obviously it's different. It doesn't mirror, but it rhymes for sure with some of what we're seeing in the market.
Brandon Sedloff: You and I are similar in that we're a technology company. You have a technology background, we have venture capital firms that are invested with us. I look at some of the parallels. I have this hypothesis that if you look at the best VCs out there, they're not just providing you with dollars. Dollars are relatively easy to find. If you have a good idea, they're providing you with context. They're providing you with expertise, they're providing you with resources. They're truly being a partner. In the parallel, in the strategic capital space right now and real estate, it's pretty early days.
The vast majority of the firms are really just providing you with capital. By the way, that's really valuable. It's important and these are good quality firms. But I think the next iteration of this, we're gonna have firms that are gonna set up centers of excellence and be able to help you recruit your talent, help you with your technology stack, help you with distribution, help you with all the things that you need to run your [00:25:00] business so that you could focus on the thing that you're really good at, which is creating value from real assets 'cause ultimately, that's why people are betting on you is they believe that you can create value using real estate in ways that other people cannot.
Brad Hargreaves: I wanna double down on tech for a second. And, you're obviously, on the capital market side, so you see what's going on there, but you're also on the tech side and you're talking to a lot of real estate owners, a lot of real estate investors about how they're thinking about technology in their own business. One thing we've seen over the past 10 years is this explosion of PropTech. More and more companies raising more and more venture dollars to sell into the real estate industry. So if you're talking to an owner and they're operating in, you know, multifamily or some, some major food group, how would you help them navigate all of this different technology that is in front of them today?
Brandon Sedloff: It's a really great question and one that I've been focused on since 2011. So just to give you, and maybe the listener some context. So 2011, I was helping to run ULI in [00:26:00] Asia Pacific, living in Hong Kong. 2013 I moved back to the US and I was working for the Urban Land Institute, which is a industry think tank. And the then CEO Patrick Phillips, asked me to take on this role helping with fundraising for the organization globally, and so my job was to go to all of the organizations that supported ULI through membership and ask them to give money to help kind of further the mission of the institute.
And I'm thinking to myself, I said, well, you know, what else? Here's people who are titans of industry, what else could ULI potentially offer to them that they don't already know? And I went on a bit of a road show, and after that road show, two themes emerge.
Number one, executives at top real estate companies cared a lot about technology and they had no idea where to go, who to talk to in order to understand it. This is back in 2013.
And then the second was: capital is the driver of the real estate business. They wanted to understand alternative sources of capital and where they could go to form new capital relationships. Interestingly, through ULI, I [00:27:00] was presented with the opportunity join Juniper Square, and it was the perfect intersection of those two things.
But the reason that I share that background is because in 2013, I brought a group of our friends, the VTS and the floor and the comps stack and Honest Buildings, some of these companies have now been acquired, but the leaders of what was the first or second wave of most innovative firms together with executives.
Not to help one firm sell to the other, buy from the other, but to educate and the first thing I said is: raise your hand if you're a technophobe? And enthusiastically everybody not only put one hand in the AIr, but they shot both hands up. And that was the state of play 12 years ago.
that's how recent this evolution has become. Now, if you fast forward today, I don't love the moniker PropTech because I think it's real estate, and in order to be in real estate, you need to be using technology as a core to your business. I think the biggest challenge that we see, there's a few of 'em right now inside of real estate companies.
Number one is we're still on the evolution of firms [00:28:00] understanding how to hire and deputize people to think about technology on their behalf. So, I've been promoting this concept for investment managers that your head of technology is not the person at the firm who fixes your Blackberry. They need to be a strategic partner to the executive team that you need to give them permission to take risks. You need to give them budget, to make decisions, and we're starting to see this change through technology leaders, and I think it's really important, but we still have this concept in a lot of organizations that technology is like, you know, an IT problem and it's not.
This is a business strategy opportunity. The more people understand that, the better. So I think that's one kind of one challenge that we have. I think the second is people conflate buying a lot of technology with using technology efficiently. So I've actually observed an inverse correlation between firms that have licensed a lot of applications to use and their ability to use the data, the insights from those applications to make business decisions.
Because typically what [00:29:00] happens when you have a lot of applications is you have sprawl and those systems don't talk to each other, and so you're actually just building data silos. And then I think the third really big challenge is because of the proliferation and this willingness to adopt technology, there's been a proliferation of new technology companies to sell to the real estate industry. It's a big industry. If you remember my kind of opening statement about why did Juniper Square start in real estate, because it's one of the largest addressable markets in the world, super deep hundreds of thousands of companies to sell to.
But the problem is, number one, as a buyer, as a real estate company, you want technology that solves a business problem. We gotta move away from the incrementalism. Like it's a nice to have. We're still very much at the must have stage, and I think firms would be really well served by focusing on a handful of core technology applications that they use to run their business, doubling down on those, getting them right, refining them before they go out and continue to bolt on and bolt on and bolt on, because that just [00:30:00] creates tech debt, it creates sprawl, it creates data silos, it creates complexity that, quite frankly is unnecessary. The last thing I would say, and I'm curious to get your reaction on this one, Brad, but like AI is absolutely going to be a game changer.
Collectively as an industry we're, on a scale of one to 10, in terms of our understanding of AI we're like lucky to be at a level one, in my opinion. Maybe you'd be more generous, but I think this is really gonna transform the way that every company in our space and technology company thinks about their business.
Brad Hargreaves: I 100% agree with that. You're seeing a lot of tech fatigue out there right now. I think there was a stat I saw the other day that the average onsite property manager has 21 separate logins to various technology tools. I mean, that is insane. You can't operate in that environment.
And you know, ironically, a lot of AI or what is broadly called AI, is a potential solution to that [00:31:00] too, of making it easier to integrate between these various tools. I do want to have a big asterisk here. This is something I say a lot, not all the things that are called AI are AI, that is not necessarily a bad thing.
If a tool that is doing a really great job integrating between different tools and automating things, gets attention and gets adoption, it doesn't matter if it's just sparkling automation, and is not actually honest to God, you know, learning and adapting AI.
That's fine. If that gets real estate to think hard about putting smart automations in place, that's a good thing. Some of the more exciting and interesting things in genuine AI, some of the computer vision stuff I'm seeing around site analysis, that's super cool.
I don't wanna distract us here. I do want to, as you were describing this, and the advice you're giving, which is, so salient to real estate owners. I wanna [00:32:00] flip that on its head and say, if you're in the position of selling tech into real estate owners, you're see experiencing this tech fatigue at the same time. There's a big narrative around, you have to get good at tech, which was definitely not the case 12 years ago. In the same way, how would you go about that sales motion, convincing owners, operators to pay attention and give it a shot?
Brandon Sedloff: One of the things that I learned and we learned at Juniper Square really early on is that it doesn't matter how great of a sales person you are, you're not going to your job is not to convince somebody that your tool needs to be implemented in their organization.
And I think we have a lot of convincing going on right now. Instead, your job is to identify problems that a that a prospect has, and you need to help them understand how that problem can be solved with your solution.
It means a few things. It [00:33:00] means the job of a technology sales team is way harder. You need to get really specific on what your ideal client profile is, or your ICP, and you need to be really focused on how you can help them solve problems that they have, not problems that you want them to have, because you have a solution for it. That's number one.
The other thing that we learned really early on is that rather than sell your solution, because remember, we're not actually selling, we're matching a solution to a problem. Let your customers do that. Find great customers who have a real problem that your solution can help match and then make your customers successful. Once your customers are successful, you actually don't need to sell your product, especially if it's an early stage product, if you're still scaling.
The way that you can handle that is don't listen to me, the salesperson, just go talk to the user. Because in our industry, because of how historically adverse we've been to adopting technology, not because we don't like technology, [00:34:00] just because our level of understanding has been low, because we haven't needed to deeply understand it.
There's a tendency to want to trust your peers, and so the most powerful thing that you can leverage as a technology sales team is this social proof, this pure validation because ultimately one of the blessings and one of the curses of selling anything into this space, whether you're a broker, whether you're a technology company, whether you're a banker, is that this is a really small industry.
Everybody talks. You've got to not over promise and underdeliver. You've got to match client problems to your solution, to real client problems, and then you need to make sure that not only do you deliver, but you exceed expectations. Because if you don't, you won't last very long in this industry because everybody talks. You might get your next 10, 20 clients, but there's no long-term viability for your business. Like any market maturing, you get new entrants. There's some [00:35:00] shadiness, there's some overzealousness, there's some just pure hubris, and that's all great, but like you gotta cut through the noise.
So if you're a seller right now, just know that that's what you're selling against and if your product actually works, you have to put your blinders on. And I can tell you we've been at this for a long time, right? I've been here for nine years. When I joined, we had 30 customers. Today we have over 2100.
It's been a long journey and how many of those customers said no to me? Once, twice, three times, a lot. But if your business is viable and you're playing the long game, every time somebody said no, I said, I'm disappointed. Of course. I'm like, I understand, as long as you found a solution that works for you and you're happy, I'm happy.
And guess what? You're creating space for people to come back and they will come back if you don't make them feel embarrassed or ashamed because people aren't not selecting your solution 'cause they don't like you or because they think you're crappy. It's just they feel like for them something is better and that's okay because they know [00:36:00] everything about them and a very little bit about you and everything about you and a very little bit about them.
So with time, the more you can know about each other, the more likely are you'd have a good partnership.
Brad Hargreaves: I love that. And I do wanna double down on that point of real estate being a very word of mouth industry. It's one of the biggest mistakes I see people who are used to other industries coming into sell into real estate owners.
We teach a course Selling into Real Estate Owners, and one of the biggest mistakes I see is people don't understand even competitive firms talk, because if there are two multifamily operators in a given market a lot of vendors recognize that as they're competitive. They're not gonna talk about what technology they're using.
Not true at all, because real estate is so fragmented. They're probably buddies. They're out golfing all the time, they're sharing market intel. They're talking about how their development projects are moving along, and they're definitely talking about the good and the bad of technology solutions they're using onsite.
It is a viral industry, unlike any given the fragmentation of it. I wanna [00:37:00] pivot for a second. We, we have a few minutes left. I do wanna talk about your podcast, the distribution. Tell me a little bit about the thinking there and how you're thinking about building your personal brand and Juniper Square's brand by going out there and hosting those conversations.
Brandon Sedloff: So the origin story of the podcast is really interesting and not what most people think, but, inside of Juniper Square there's a lot of people who come from real estate and private markets, but there's a lot of people who have never worked and don't understand private markets. They're technologists, they're engineers, they're product managers, and this is their first time really getting exposure to this asset class.
I was always being asked by colleagues internally, Hey, can you introduce me to the clients? Because one of the ways that you build great products is you talk to your clients and you build with them and you build for them, and that's part of our DNA. But as the company grew and scaled, it was impossible to introduce clients to every sub-team that's working on a sprint on a specific initiative.
I realized one day that I'm in a really privileged place. I have people who are leaders in the industry who know me and who [00:38:00] trust me, who are willing to share their thoughts with me. And then I realized the vast majority of what we talk about is actually not confidential. Occasionally somebody will say something that's pretty confidential.
The way the first episode started was really to fulfill this request from internal colleagues. To help them better understand what's happening in the industry. So my very first email that went out was to Andrew Holmberg at Berkeley Partners, who's a friend and a client.
I said to Andrew, I said, Hey, can we have a conversation and can I record it so I can share it internally? And I said, I might do some other stuff with it, but I'm not sure. Lo and behold, I recorded two or three of those. I realized that podcasting was taking off. I had a bunch of people tell me why starting a podcast was a terrible idea.
The reason that they told me it was a terrible idea is it's really hard to quantify engagement, right? I said, that's great 'cause I'm actually not trying to drive external engagement. I'm not trying to sell ads. I just want to create a medium where we can share information and so that was how it started.
It's been a lot of fun. I've got a great team that supports me and the idea there is to interview great people and give them a [00:39:00] platform to tell their origin story, the origin story of their companies and their general outlook on the market. I find similar to this podcast and others, each one of us kind of fills a niche and a void in the market.
And the market's just so hungry for information. We all have a lot to contribute. I'm just very humbled that people listen to the episodes and I'm even more humbled when I get nice feedback from people who have found it helpful. I've had a few investors tell me they've actually cited quotes from the episodes in their investment committee memos, which is really cool to me and blows my mind.
What it highlights is the importance of the work that you're doing with Thesis Driven and others are doing to bring more content and more awareness to the industry. I do think that the role of professionals in real estate is changing and it's no longer sufficient to be great at building Excel models or to be hyper-focused on working in your business and only looking internally.
The one theme across nearly 60 episodes of the distribution that is [00:40:00] omnipresent is the importance and the power of relationships. The way that you have relationships is you put yourself out there, you have a point of view, you develop a brand. This is really critically important for any professionals who are thinking about kind of longevity in this career because the thing that will set you apart is your willingness and your ability to have a point of view and to be okay that some people may agree with you, other people may not, but but the real critical thing is this authenticity that comes from actually having a point of view.
Brad Hargreaves: I wanna build on that and just go back to some of the things we discussed at the beginning around state of the capital markets. It's a weird, in many ways, tough environment for GPs right now. A lot of emerging real estate managers watch the show, listen to the show. What advice would you give them? Other than building a strong personal brand, which I absolutely share that advice.
Brandon Sedloff: I think the number one thing that people need to remember is people buy [00:41:00] things and wanna work with people that they like and they trust. In order to have that, you need to be really good at making it clear to somebody why they should trust you. More specifically, learn how to tell your story and make sure that your story is differentiated.
Let me give you an example of some things that are not differentiated. Your deal flow is not differentiated.
Brad Hargreaves: Right.
Brandon Sedloff: I talk to GPs all day, every day, and every single one of them tells me that the thing that is different about them is they have access to proprietary deal flow. It can't be true that 10,000 GPs all have access to proprietary deal flow in the same sector, so that's not different.
Your team may be the best team in the industry, but that's not different. There's a lot of really phenomenal people who have a lot of history in this industry. It's important, but it's not different. So I think the most important thing is to know what you're doing and how it's different, then match that strategy to people who actually want or need access to it.
So don't go sell a [00:42:00] $50 million fund trying to bang on the door of CalPERS or Calsters 'cause they're not interested in it. They have managers that they've given money to who might be, but they're not. So getting really hyperfocused on the thing that you're better than anybody else at that you're different.
Where your point of differentiation is just gonna save you a lot of time and if you can't answer that question, candidly, I think you need to pause and make sure that you really know why you're getting into this business. It's not that we don't want more great people in the business, it's because it's just gonna be really hard as the level of competition gets more and more fierce, the ability to differentiate yourself from the crowd is really, really gonna matter.
Brad Hargreaves: Absolutely. In our last minute, we will do the lightning round. Quick questions, quick answers, same questions for every guest on the leader series. Ready to get started?
Brandon Sedloff: I am.
Brad Hargreaves: All right. Tell us about one startup, developer or entrepreneur you're watching, and why?
Brandon Sedloff: ProVia, because I'm an advisor to them and they're doing some really cool stuff with AI and [00:43:00] lease abstraction, and I think they're solving real problems for the customers that they serve.
Brad Hargreaves: Mind spelling that?
Brandon Sedloff: P-R-O-P-H-I-A.
Brad Hargreaves: P-R-O-P-H-I-A. Okay. Just wanna make sure people can find it.
Brandon Sedloff: You can reach out to me. I'm happy to connect you with the team.
Brad Hargreaves: When you and I are recording this podcast in the 2030s, let's say in 10 years. 2035, what is the number one tech topic we will be talking about and why?
Brandon Sedloff: AI because I think we're still in the early innings, and I think we're gonna be looking back on this period of time and realize how blissfully ignorant we were and how much it's actually changed the way that we all live, we work, we play, and more specifically the way that we use and think about real estate, both as an asset class, but also is an essential need.
Brad Hargreaves: What is one city or place you would bet on?
Brandon Sedloff: I don't think you can bet against the US long term. So I'd say the US. I've lived in Hong Kong, I've spent a lot of time in Europe. I love traveling in South America, but long term the U.S., the depth of this market, the [00:44:00] liquidity in this market, the sophistication of this market has a lot of long-term opportunity.
Brad Hargreaves: Last question. What's your favorite app on your home screen?
Brandon Sedloff: I use Strava. I like to exercise and I love to see the data and the analytics of how far, how fast, how it's changing over time. More recently, my son, has also started running with me, so it's a fun way to try to keep up with him and be in awe about how much fitter and faster he is at the ripe old age of 12 than I am.
Brad Hargreaves: Yes. I love that. I have an 8-year-old myself who I'm trying to get into that with me this year. So I love that. I think it's the first Strava mention for that question. Brandon, thank you so, so much for joining the show. It's been a fun conversation. Really enjoyed it. Appreciate having you on.
Brandon Sedloff: Brad, thanks for having me. I appreciate all you do for the industry and thank you again. It's been a great conversation.
Thank you all so much for tuning into that conversation. Hope you enjoyed it. Thank you Brandon again for joining us on the Thesis Driven Leader Series. Welcome all of you to join us again next week. We have another person with really the catbird seat into what's happening in the future of real estate.
I'll be joined by Rukus Esi, the Chief Digital Officer at AvalonBay, one of the largest multifamily owners out there, huge public REIT, and really on the forefront of embracing and building new technology in multifamily, so you'll definitely wanna join us next week for that conversation with Rukus.
Thank you all so much and see you next week.
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