Every entrepreneur can pinpoint his or her “eureka” moment -- the first time the big ideas came together to form what could potentially become a cohesive business concept. When I first agreed to meet my future co-founder at a Le Pain Quotidien restaurant in Manhattan, I’d planned on hearing out some of his ideas and leaving half an hour later. Instead, we spent hours dreaming up the company that would eventually become Reonomy.
It was during that conversation that we realized we could break into the $15-trillion U.S. commercial real estate (CRE) market by offering something that developers and banks really wanted: a tech-driven data platform that could deliver granular information about New York properties in a simple, intuitive way. We wanted to collect the data, develop the algorithms and raise the capital ourselves to create a functional tool that would cover commercial properties in all five boroughs. And within a few years, that’s exactly what we were able to do.
If you’re lucky like I was, you’ll be able to bring your original vision -- or something close to it -- to life. But, you’ll probably also discover, as we did, that starting a company and scaling it are two very different things. Growing our platform from a resource that covered 320,000 properties in New York to a comprehensive national tool covering 47 million properties across the country required a major shift in our data aggregation model -- a shift that ultimately required concessions that weren’t a part of our original vision. But, as we’ve worked to reimagine the way in which we collected and organized the data that drives our core product, we’ve positioned ourselves for scalable success.
Scaling talent non-incrementally
Our initial goal was an ambitious one: to build a platform that could deliver insights about all properties in New York without the help of data vendors. But, anyone with enough time on their hands could collect and centralize that information. The hard work was in weaving the information together in useful ways that would deliver insights that customers really wanted.
We spent our first year working out of a supply closet, dedicating what little money we had to hiring exceptional talent capable not only of working with huge datasets, but developing machine learning algorithms that could reliably pull insights from those datasets. Within a year, our team was able to develop and launch a beta release covering 320,000 properties that allowed us to secure $16.7 million in Series A and B funding.
Achieving all of this was incredibly exciting, to say the least, and a huge part of that excitement was the fact that we hadn’t deviated from the course we first set for ourselves in that restaurant a year before. Our plan had always been to start in New York and expand from city to city across the country after that. After all, if you can make it here in New York, you can make it anywhere, right? But, while our soft launch in Los Angeles showed promise, our expansion to the West Coast taught us that if we really wanted to scale nationally, we’d need to adjust our aggregation strategy.
As it turned out, New York is anomalous in a lot of ways that proved to be advantageous for us during Reonomy’s first year in business. For one thing, New York is ahead of the curve when it comes to the digitization of CRE data, which is generally structured in ways that are machine-readable. Los Angeles is more complicated: There are 89 different municipalities incorporated in LA County alone, each with its own approach to collecting and organizing property data.
It was difficult enough to take all of New York’s structured data and stitch it together in a meaningful way for a user base of seasoned CRE professionals. But, despite all the resources and expertise we’d accumulated since our New York launch, LA turned out to be its own animal. After collecting and standardizing the granular information we needed, we realized our manual method was simply not efficient enough for a nationwide expansion. CRE data across the country is gathered using different methods and standards by different counties, municipalities and cities. With almost 3,200 counties in the U.S., aggregating all that information ourselves would be an untenable strategy.
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Finding the right partners
When Reonomy was first born, we were adamantly opposed to relying on data partnerships. But, as our needs changed, we quickly realized that such partnerships were the most efficient way to develop our national product. We began curating a best-in-class network of data vendors who could assist us in aggregating property information, allowing our team to focus on making that information compatible with our platform and drawing meaningful insights that added value to our product. Now, rather than scouring for data points on our own, we’ve crafted a strategic list of partners whose libraries we’re able to selectively enhance with our own collection, enabling us to scale our business efficiently.
Every entrepreneur will encounter roadblocks that challenge the original vision. Whether those roadblocks call into question the viability of the product itself or the internal processes that push it forward, the refusal to consider alternatives will only stymie your potential for growth.
At Reonomy, our greatest skill wasn’t collecting data, but turning it into something valuable, something that could bring serious material benefits to our users. If we’d understood this earlier on, we might have been able to avoid many of the difficulties we encountered leading up to our LA launch. If you can successfully navigate a nonlinear trajectory during the early stages of launching and growing a business, you’ll be prepared for the other inevitable changes in store for both your ompany and industry.