Tuesday, May 2, 2017
How Digsy Is Using Data, And Deals, To Drive Real Estate Sales
Andrew Bermudez, co-founder and CEO of Irvine-based Digsy (www.getdigsy.com) wasn't looking to build software to help commercial real estate brokers close more deals. He was just trying to collect more data for his startup on what was happening on real estate deals that the company had been referring to brokers. However, he quickly discovered the deal data the company was collecting was not just data--but a guide to the best practices on helping brokers close more deals, quickly. We spoke with Andrew about how the company pivoted from its original model after finding a huge amount of traction for its sales software and data, and its ability to guide brokers on the best practices for them to close more deals, which it is now offering as software-as-a-service.
What is Digsy?
Andrew Bermudez: Originally, Digsy was an Uber for commercial brokers. My background is in commercial real estate. I spent 12 years as a vice president in commercial real estate, and saw an opportunity. Brokers want deals, but nine out of ten calls they get are bozos. Those are people who can't afford space, or have bad financials. We had created a tool to let people search online for commercial real estate, then we'd have a concierge plug them into a broker, so that they could meet with a tenant or buyer. We'd get 20 percent, because we had a real estate license to collect that. However, starting in 2015, we found that creating this was really hard. We figured out we needed some tools to monitor the performance of the agents, otherwise they'd just fall off the face of the earth. We created some CRM-esque tools for deal flow management, and we gamified it, where agents would only receive deals by complying with some rules. For example, if they were working a deal, they would have to wait until it closed to get another deal. But, what they could do, is if they provided a report on their progress, a weekly report or every other week, they would accumulate deal credit, which would enable them to get another deal. That was a way for us to get compliance, by gamifying the process. It worked well.
How did that work?
Andrwe Bermudez: We were able to get a lot of data using those tools, and then latched onto their email communications. When they saw an email, they could just click here and be done, rather than having to go through the effort of logging into the system. From that data, we were able to collect deal status on whether this or that deal was stalled, or not moving forward. We were able to identify that there were small subsets of agents who were doing 12 times more deals than anyone else. We said, huh, are there any patterns these top agents were doing that others weren't?
One of our four engineers is a data science guy, who used to be at Stocktwits. He's the former CTO at Stocktwits, and he did the analysis and found out a lot of stuff. We found that the best agents were immediately submit a short list to clients, in only three to five hours, and immediately get a meeting on the calendar. Within a few days, they'd have their first, face to face meeting. So, what I did was pick up the phone, and start talking to those agents. All of them did really well after meeting people face to face. We all know that you develop better rapport with someone, cement relationships, and have a lot more commitment to someone when we do that. But we don't usually have data to quantify that. I then called about twenty of the underperformers, and found out that they didn't have any face-to-face meetings at all. They would just sent out lists.
Using that data, we started telling people to have face to face metings, telling agents that if they would meet a client face-to-face, they would get rewards through deal credits. We ran that for 90 days, and within 45 days, their performance doubled. After refining their metrics even more, they doubled their performance, and then quadrupled it. We continued to enhance our software to make it easier for them to follow the steps to cash in on credits, and of course, by following those steps they were able to predictably close more deals. That meant we made more money, and gave them more deals, because those deals would lead to more revenue. By the beginning of last year, I had a call with a big commercial brokerage, and they told usówe had these guys who had been flat for the past three years, and are doing exceptional now, and each one, in the sales meeting, said it was because of Digsy. When we looked at it, we found out that although they only worked a couple of deals through our deals, the rest of their deals were self generated, but they were using our findings on best practices for all their clients. Talking to those agents, they said they had applied what we he taught them, and it had literally changed their life.
Is that when you switched to focusing more on the software end of this rather than sourcing deals?
Andrew Bermudez: We didn't make a hard shift, because when we started Digsy, we were just building this to improve our revenues. When companies started to come to us and really pursued me about it, we talked to the board, and discussed the opportunity for us to license this as software-as-a-service. We decided that we couldn't commingle our databases, and our interfaces needed to clean this up, so we spent two weeks creating as an MVP. After we launched our first, paid pilot, we had 100 percent adoption of the platform, which is pretty impressive. Our daily active users went through the roof, over 40 percent, compared to most apps, where you are only at 10 to 20 percent daily usage.
How's the startup funded?
Andrew Bermudez: We are funded by the Tech Coast Angels, the ACE Fund, and K65, as well as Gil Amelio, the former CEO of Apple, as well as Sean Ellis of Dropbox and GrowthHackers, as well as other angels and entrepeneurs. We've had a very small round, and it was pretty full, of between $1M and $2M around March, and we're using that to beef up our marketing and hire one more engineer.
Has analyzing all this data been illuminating to you on things you've personally seen in the real estate industry?Andrew Bermudez: It's kind of funny. It does quantify things that I did in real estate. I left in 2012, and I was one of the top 5 of the top 10. I did a testóbefore all of these spam bots pretending to be human beingsówhere we would sent out personalized email. We did a test where our team would only focus on collecting emails, and emailing those prospects, and correlating the number of responses to the number of potential sales. The rest of the team were doing phone calls, through cold calls. We found the team with the email was extremely outperforming the team making phone calls. What's interesting for us now, is we see that the people making phone calls, rather than those sending emails, are doing better. We also notice people who have more face-to-face time are performing better, and the very disciplined folks who follow up with a high number of touches, as many as 5 to 12 or more, do better. It's an old business--real estate brokers are like old bankers, and there hasn't been a lot of innovation in the industry, so no one else has ever tried to turn sales into science.
What's the biggest lesson you've learned so far from the startup?
Andrew Bermudez: The biggest lesson, is the team is everything. I lucked out, because Alex and I became really good friends maybe 10 years ago. He's the smartest guy, and not just book but also street smart, a superb designer and engineer, a great leader, and everyone loves him. What we've done a lot is really focused on hiring. The biggest lesson I have learned is if you think someone does not fit the team, you need to fire fast. Regardless of the big voices that were afraid fo what would happen when someone leaves, I think it's better just to get them out. The team is everything. If we were to start another company, I would immediately be approaching Alex, and we would try to recruit all fo the brilliant, talented people we have here who have the same devotion to the company we do. It makes all of the difference. We could kick ass with this same team, even if we were selling grilled chesse sandwiches!
Finally, what's next for Digsy?
Andrew Bermudez: We are working on a few things. We're not a CRM replacement, we are a CRM enhancement. Because we are helping to generate sales opportunities, we need to get things into CRM tools. It's critical for us to partner up and integrate with such tools as Salesforce.com, Microsoft Dynamics, to build out more machine learning tools, and partnering with sales trainers, consultancies, and really get the gospel of Digsy out there, so more product and sales teams can just crush it.