Meeting Title: CRE-AI Date: 2023-11-07 Meeting participants: Uttam Kumaran
WEBVTT
1 00:00:33.030 ⇒ 00:00:34.140 Uttam Kumaran: Jeffrey.
2 00:00:34.370 ⇒ 00:00:38.830 Uttam Kumaran: Most of his work is in in now, but you know other segments of it.
3 00:00:39.800 ⇒ 00:00:41.700 And then and then there’s
4 00:00:41.900 ⇒ 00:00:47.310 Uttam Kumaran: the biggest segment. Actually, I think, by core footage is industrial, which is warehouse warehouse, free stuff.
5 00:00:48.320 ⇒ 00:00:50.030 Uttam Kumaran: Sorry. Just a.
6 00:00:50.080 ⇒ 00:01:16.389 Uttam Kumaran: you know Orient ourselves when we say when I say series talking about office, and for the most part multi-ten, ever least office space. Pro, I would qualify. It’s like institutional office product is what we’re mostly talking about not to your point, like not. And what he says institutionally means is, each asset is owned obviously by someone, and institutional is probably 90
7 00:01:16.770 ⇒ 00:01:22.910 Uttam Kumaran: plus percent of market, meaning that. And the way to think about each
8 00:01:22.970 ⇒ 00:01:34.649 Uttam Kumaran: each asset is as a little mini company, because it literally is, they’re usually Spb’s. They’re like. literally, usually an Ls here and Spb. and each building will reach.
9 00:01:35.640 ⇒ 00:01:59.449 Uttam Kumaran: Sometimes it’s 2 or 3 buildings like an office part will have a general partner. So this is gonna sound familiar, Scott, cause it’s just like we see capital stacks. General investors may own 15 other top of the waterfall, and and then there’s a bunch of limited partners, which is what Jeff is recruiting this morning is just to get a. These are people who write checks, but they just write checks
10 00:01:59.800 ⇒ 00:02:10.380 Uttam Kumaran: and they have no no control, no control. Yeah, they’re passing investors. And then that makes up about 40 varies about 40% of the equity. And then 60% step.
11 00:02:11.210 ⇒ 00:02:12.739 Uttam Kumaran: Most of the debt
12 00:02:12.850 ⇒ 00:02:32.469 Uttam Kumaran: comes from banking live codes, alternatives like, there’s Deb phones. Now, private credits like a super hot new. Yeah. Credit. The biggest one is being Wall Street, you can see. As for commercial back from respect to Turkey, so that’s a there’s a whole massive credit market for just
13 00:02:32.580 ⇒ 00:02:42.960 Uttam Kumaran: lending money. And then and roughly, there’s 4 inches. And so the morning well, a little different. They’re usually a term based facility. So let’s say, here’s here’s 4 years of
14 00:02:43.260 ⇒ 00:02:46.920 Uttam Kumaran: you know. Here’s a term long for 4 years. Yeah. and
15 00:02:47.090 ⇒ 00:03:12.419 Uttam Kumaran: you better pay me this much every quarter, and if you don’t, you break your covenants. And I undergoing yeah. And so we’re trying to rate like today on a Fanny mail. That’s 6 9 year term. So it’s anyways, it’s it’s it’s just like a mortgage. So you know, hedging and all that right now we’re at a point where the cycles are. Obviously the interest rates
16 00:03:12.420 ⇒ 00:03:18.210 have gone up, and you got all these billions of tents left, right, interest rates went up so it’s just
17 00:03:18.410 ⇒ 00:03:38.289 Uttam Kumaran: fucking disaster. People who had billing to I had. Now I got a refuge. Yeah. So my loans rolling over, I have 0 one money now. It’s whatever there’s the Sf. Building that I was reading about. And basically the way you you finance these is.
18 00:03:38.300 ⇒ 00:03:40.430 Uttam Kumaran: what’s your cash flow for the next 10 years?
19 00:03:40.690 ⇒ 00:03:54.519 Uttam Kumaran: What do you mean? Cash flow? Show me all your leases. That’s your cash flow. And if you have empty office, that’s not cash flow, it’s it’s really just kind of very direct financial. So it’s really bad time.
20 00:03:54.620 ⇒ 00:04:15.559 Uttam Kumaran: But it’s a wildly cyclical market. This happens every 10 years automatically, you know, 10 to 15 years. Automatically, these guys know it. So there’s a bunch of dress distress, and they’re all in the market, and they’re offering like 45 million dollars and treated like 5 years ago, 2, 50, or something. Yeah, they just kind of go.
21 00:04:15.830 ⇒ 00:04:25.489 Uttam Kumaran: Yeah, you know, distress phones all the way. Yup, and then good time to get into stress, fun, bad time to be in a.
22 00:04:25.590 ⇒ 00:04:31.459 Uttam Kumaran: So that’s the that’s kind of the macroeconomics and gentry has raised the point.
23 00:04:32.260 ⇒ 00:04:49.380 Uttam Kumaran: the buying and selling of these billings and financing on them, which he primarily does is a whole massive part of the market, which we should probably spend some time thinking into. I don’t know that much about it because we didn’t focus on this level. I think maybe you know, we could decide.
24 00:04:50.010 ⇒ 00:04:54.640 Uttam Kumaran: You know, you know, massive.
25 00:04:54.800 ⇒ 00:05:02.319 Uttam Kumaran: Yeah, it’s not really considered here. Operation of the asset. Investing and financing is the
26 00:05:02.650 ⇒ 00:05:25.119 Uttam Kumaran: so then, having said all that leasing is the is the business of, you know, getting tenants in there and leasing is primarily just about, you know, equivalent sales. Right? If you have an asset, gotta monetize it. Leasing means getting tenants in under the right under the best conditions possible, so that the cash flow the performance. Your asset looks as good as you can.
27 00:05:25.400 ⇒ 00:05:28.690 Uttam Kumaran: so 10 releases are better than 3,
28 00:05:28.740 ⇒ 00:05:41.749 Uttam Kumaran: 80 bucks, 60 less. Ti, you know. So it’s pretty strict. It’s very straightforward, financially, although I think you raise some questions about some of the models, and I think I’d like to come back
29 00:05:42.210 ⇒ 00:05:53.260 Uttam Kumaran: at the heart of all this. The beating heart of this, I think. is for every office, building, or asset. There’s a a model financial model, it’s just likely.
30 00:05:53.270 ⇒ 00:06:01.899 Uttam Kumaran: you know, are used to is running companies. It would be the the equivalent of. And usually II, the ones I’ve seen or 10 years long.
31 00:06:02.150 ⇒ 00:06:09.490 Uttam Kumaran: and they basically show here are the cash flows, and here are the costs. And here’s the Capex, and they’re very complicated excel sheets.
32 00:06:09.560 ⇒ 00:06:17.540 Uttam Kumaran: But they’re kind of I don’t think they’re more complicated.
33 00:06:17.850 ⇒ 00:06:27.879 Uttam Kumaran: And mics such as those people. Those would be spreadsheets. Or do you use software a lot of firms use software. How do you, hey?
34 00:06:29.120 ⇒ 00:06:29.940 Uttam Kumaran: Awesome?
35 00:06:30.600 ⇒ 00:06:54.250 Uttam Kumaran: What do you all use for the for the financial model itself? Got it a lot of more sophisticated big institutional groups use August, which is a big financial modeling software. But we just, I mean, I’ve done a lot with Bloomberg and a lot of specifically financial modeling for commercial. But my experience is, most people built
36 00:06:54.250 ⇒ 00:07:19.179 Uttam Kumaran: your own excel, which you could ingest right. And you can just do a lot more sensitivity, analysis in excel than you can, and so excel, lets you, you know, worlds your oyster, and that model is the heart of coming back to leasing. Should I do lease with Scott or not? Scott wants to off my building. I’m sitting here when negotiating
37 00:07:19.180 ⇒ 00:07:36.080 Uttam Kumaran: my side of that negotiation. I have to. I have to go to this model right? And there’s 7 or 8 or 10 negotiate points, and they kind of interplay in in these interesting ways. And so you have to go back to the model, or as a manager and say
38 00:07:36.080 ⇒ 00:07:44.090 Uttam Kumaran: he wants another. You know, year free rent. Should I give him 500 bucks to Ti. So these are all these interacting parameters of the deal.
39 00:07:44.480 ⇒ 00:07:58.950 Uttam Kumaran: One cool application is AI, very straightforward like you just ask those questions of the model. Show me the implication of giving 2 more bucks of Ti and and 2 year, and I mean, like
40 00:07:58.990 ⇒ 00:08:28.649 Uttam Kumaran: right now, I just have like a tab in my spreadsheet that has all these different terms fake into it. And I click. And I’m going to plug in. Okay, what if I do? You know, 5 year term, 5 year. Renewal, option, this rate. What’s my net rental? What’s my net rate across my property? Because you’re the whole point is, you’re always trying to push ransom occupancy. Hi, right? Like, that’s it’s any. But what you’re trying to do is optimize a series of
41 00:08:28.710 ⇒ 00:08:50.690 Uttam Kumaran: financial parameter. Right? Yeah, which the relationship between additionally, that’s one of my questions before was like, what are like non financial considerations. There was a bit of a discussion about like, okay, if you’re early in your career, you you trying to go for deals like those are also things I think you can provide context
42 00:08:50.690 ⇒ 00:09:15.410 Uttam Kumaran: in a financial model, having every deal so.
43 00:09:15.610 ⇒ 00:09:16.750 Uttam Kumaran: and
44 00:09:16.890 ⇒ 00:09:35.449 Uttam Kumaran: every lease has roughly these stages of Deal and Scott. The way to think about this is, it’s an enterprise sale. It takes 6 to 12 months, and what’s unique about it is, if you’re the seller, if you’re if if you own the building, what you want is 2 or 3
45 00:09:35.520 ⇒ 00:09:42.900 Uttam Kumaran: different people that you’re evaluating, so you could pick the best one.
46 00:09:43.040 ⇒ 00:09:47.739 But they don’t always line up right. So maybe he just came by a month ago. But you’re
47 00:09:47.870 ⇒ 00:10:11.309 Uttam Kumaran: right. So you have this weird problem. But something like that just figures that out, you know, and you’re managing some another consideration. Just inject yours. Different role, like the timing at which people’s leases are expiring right? So like someone might offer me a 10 year deal. But if that winds up the expiration of my biggest tenant, my building. I’m gonna make them do a 5 year deal. I’m gonna make them do a different term so that they’re not.
48 00:10:11.310 ⇒ 00:10:36.010 Uttam Kumaran: Hey? Let’s do 5 years.
49 00:10:36.650 ⇒ 00:10:44.200 Uttam Kumaran: But his heart role is. And yeah, Yada, Yada. So it’s a really interesting negotiating game theory. Yes.
50 00:10:45.460 ⇒ 00:10:49.600 Uttam Kumaran: that is consulting, you know, 2 or 3 different information sources.
51 00:10:49.860 ⇒ 00:11:09.879 Uttam Kumaran: and has kind of sparse information, right? So it just seems like a perfect perfect domain. Only my brokers don’t know. My, I mean, they might know my rent role, but they don’t know my entire financial model right? Like they. We’re not provisioning them. Oh, nice. We’re not provisioning them. Our financial model, like the brokers, are working with the information we get. So they bring us.
52 00:11:09.880 ⇒ 00:11:26.720 Uttam Kumaran: We tell them our parameters. We’re looking for this least term, this rent, this Ti, and then we they bring us our fees and say, Hey, what if this these terms? And then we tell them what we’re willing to do. And then they go offer that.
53 00:11:26.720 ⇒ 00:11:29.890 Okay, I we just plugged in.
54 00:11:30.020 ⇒ 00:11:36.530 Uttam Kumaran: Yes, right? It’s a shorter cable.
55 00:11:36.640 ⇒ 00:11:38.780 We’ve been having some issues with that.
56 00:11:44.470 ⇒ 00:11:54.959 Uttam Kumaran: I like the airplane, too.
57 00:11:58.220 ⇒ 00:12:01.949 Uttam Kumaran: Yeah. This HDMI port is kinda
58 00:12:03.680 ⇒ 00:12:09.589 it’s, like, punch down in there, see what i’m saying.
59 00:12:09.710 ⇒ 00:12:11.440 Uttam Kumaran: yeah. Probably.
60 00:12:13.330 ⇒ 00:12:20.990 Uttam Kumaran: okay.
61 00:12:21.920 ⇒ 00:12:23.869 I’m so bad.
62 00:12:50.360 ⇒ 00:12:51.820 Uttam Kumaran: Is it connected?
63 00:12:55.700 ⇒ 00:13:05.040 Uttam Kumaran: No, it’s it’s they can’t. Okay. Alright. I just wanted to check once and see if somebody remind me
64 00:13:05.060 ⇒ 00:13:08.529 in the top. Right? Yeah.
65 00:13:09.820 ⇒ 00:13:13.210 Uttam Kumaran: He hit this action. You here took that
66 00:13:13.300 ⇒ 00:13:22.140 Uttam Kumaran: slow Slider things. Yeah.
67 00:13:22.740 ⇒ 00:13:23.550 Uttam Kumaran: Oh, my.
68 00:13:25.770 ⇒ 00:13:36.980 Uttam Kumaran: there it goes. Oh, hey. you can. Yeah, you can still try airplay if you need to. That’s great. Thank you so much. Thank you. So
69 00:13:38.070 ⇒ 00:13:42.910 Uttam Kumaran: just to spend. It’s important now to dive into each lease transaction. So.
70 00:13:43.100 ⇒ 00:13:50.819 Uttam Kumaran: I think you’ve already got both of you grasp the kind of game theory around each of these deals within each deal.
71 00:13:51.180 ⇒ 00:14:01.749 Uttam Kumaran: Then you could break it down into at least. Well, okay. So each deal. Yeah. Each side is represented by a broker and roughly by law you have to be
72 00:14:01.870 ⇒ 00:14:22.299 Uttam Kumaran: which is fucked up and gonna change in the next 5 years because of these lawsuits. Super super interesting. It’s just an country that you have to have. It’s a consumer protection idea, but it really is. It’s just names. Brokers make a shift on money.
73 00:14:22.490 ⇒ 00:14:44.660 Uttam Kumaran: and so they make 6 tip roughly, 6% of everything, 5 to 6, depending on the state, and split usually kind of equally between the broker for the tenant and the landlord, and 4% for the tenants rep and 2%. And the landlord funds. The it’s the same set of codes for selling Home Office exactly the same
74 00:14:44.810 ⇒ 00:14:50.529 Uttam Kumaran: licensing stuff. And everyone needs to have a license from this thing called track. He has one.
75 00:14:50.550 ⇒ 00:14:54.680 Uttam Kumaran: or having a social license take, take about a year to get. So there’s
76 00:14:54.900 ⇒ 00:15:05.150 Uttam Kumaran: anyway, they and they have to be here. And so their whole job is to help navigate all these other people that take them as like consulting.
77 00:15:05.920 ⇒ 00:15:25.049 Uttam Kumaran: to, to collect all the data and to finish the negotiation on this deal, the biggest one. And and so, just to start the beginning, there is no listing marketplace as you’d expect, so that the equivalent of the what’s the resident. It’s a private company called Co-star. It’s a monopoly
78 00:15:25.200 ⇒ 00:15:50.969 Uttam Kumaran: long story, but it just is right. Roughly, if you have a lease, you gotta put it in Costar, and Costar’s not public. You have to have a broker to use it, and it’s $16,000 a year, 60,000 a a year for a broker, and they will sue the living shit out of you if you try and run it. Or you know, they’re really interesting. This is where inventory 98% inventory is
79 00:15:51.140 ⇒ 00:15:59.790 Uttam Kumaran: has to be provided here. There is no kind of like, you know. every all these other markets we’re just used to having. Everything’s yeah in a marketplace. That’s not. That’s not true.
80 00:15:59.940 ⇒ 00:16:03.480 Uttam Kumaran: Then the biggest, I think.
81 00:16:03.560 ⇒ 00:16:12.710 Uttam Kumaran: set up sub. You know, sub experts that have to consult and get involved in every deal have to do with the build out of the office. And
82 00:16:12.890 ⇒ 00:16:19.130 Uttam Kumaran: you know. Roughly speaking, the metaphor I like to use is that the average office leads.
83 00:16:19.540 ⇒ 00:16:29.220 Uttam Kumaran: which is like 15 to 20,000 square feet in the United States. The amount of construction for every lease is equivalent to the average price of a home in the Us.
84 00:16:29.600 ⇒ 00:16:37.080 Uttam Kumaran: So for the average lease, the Median lease would be somewhere around 2025,000 support, which is not big.
85 00:16:38.290 ⇒ 00:16:55.429 Uttam Kumaran: Maybe all of a 4 point be like half of this 4 point. The amount of construction dollars spent to make that space be what the tenant wants is equal to the cost of building a home. United States about 250 grand, okay, but 300 grand.
86 00:16:56.210 ⇒ 00:17:04.420 Uttam Kumaran: So that’s kind of to me, the big OS, because I didn’t know that at all before I got into like, are you fucking, kidding me? There’s a like you are building home
87 00:17:04.430 ⇒ 00:17:17.760 Uttam Kumaran: for every lease like Jeff, and to me that’s one of those things you have to kind of ponder for a minute. So so they average about 10
88 00:17:18.200 ⇒ 00:17:31.230 Uttam Kumaran: depending on it all. It’s all contingent on the the condition of the space. But you’re easily like 150 to $200 and construction. Your number works.
89 00:17:31.450 ⇒ 00:17:39.370 Uttam Kumaran: So so you know he was pondered that for a minute. You know, Scott, and you know.
90 00:17:39.420 ⇒ 00:17:43.730 Uttam Kumaran: I think I think then you could begin to appreciate how
91 00:17:44.360 ⇒ 00:17:56.660 Uttam Kumaran: confusing and sort of fucked up. I think these processes are, cause while he’s negotiating with the Cfo. Or you know, these. And frankly so go through brokers, half of them.
92 00:17:57.010 ⇒ 00:18:09.779 Uttam Kumaran: They’re just. Aren’t that bright? No, so so so somebody like gentry back here is talking to some Cfo through these brokers. Yeah, they’re starting to to banter back these terms, just, you know, just
93 00:18:10.230 ⇒ 00:18:26.250 Uttam Kumaran: like a kind of like, not not binding like. How about this? How about that? And architects for sending like 4 plans, with, like all of the construction materials and stuff that you’d have to do to really build a space right? So there’s a real CAD system down here
94 00:18:26.510 ⇒ 00:18:33.410 Uttam Kumaran: that somebody is building a full blown Tad model. But maybe I’m jumping ahead a little bit.
95 00:18:33.640 ⇒ 00:18:47.519 Uttam Kumaran: I’ve done this a couple of times. I sat on the tenant side for a couple of buildings and experienced talk, George, you’re talking about. And I even liked the guy with Stick Anderson. So I felt like I wasn’t getting fucked. Maybe that was just an illusion.
96 00:18:47.550 ⇒ 00:18:49.100 But my question is
97 00:18:50.460 ⇒ 00:18:54.619 Uttam Kumaran: like one of these might not look like all the others, right, in other words.
98 00:18:55.130 ⇒ 00:18:59.659 Uttam Kumaran: like architects and designers. Ton of money in there. But
99 00:18:59.940 ⇒ 00:19:02.230 Uttam Kumaran: kind of the comment Brittany made.
100 00:19:02.840 ⇒ 00:19:11.230 Uttam Kumaran: They’re professionals. They’re required. There’s a huge amount of variability. It’s ultra subjective. And so that one
101 00:19:12.160 ⇒ 00:19:20.260 Uttam Kumaran: onto similarly on the contractor side, my boy. Ultimately all the money like percentage-wise.
102 00:19:20.380 ⇒ 00:19:36.039 Uttam Kumaran: But it’s physical, hard costs. I can’t. It’s not marketing. So let me let me just come back to that. But sorry. Let me finish. Stop! But maybe lawyers, but definitely brokers may not present company. Excluded, of course, be that smart
103 00:19:36.080 ⇒ 00:19:38.989 Uttam Kumaran: and so like, why do I have them?
104 00:19:39.250 ⇒ 00:19:46.380 Uttam Kumaran: No, I know why they’re there today. Why do I have them? Because the ones I interacted with
105 00:19:46.600 ⇒ 00:20:01.879 Uttam Kumaran: I know that. Okay. But but I’m saying, in in my future state, why do I have them? Because they don’t appear to have that much. So good question deserves a detailed answer.
106 00:20:02.120 ⇒ 00:20:27.149 Uttam Kumaran: I think there’s more defensibility on this side than that. If Britney were here she would tell the story better than I. But I’m gonna try and channel. This he 2 thirds of the people in his work, fucking hate these people and say, you add, knows that you know 0 value you fucking. They sign one year contracts. They fire. They’re releasing brokers every year just because they piss them off.
107 00:20:27.810 ⇒ 00:20:51.300 Uttam Kumaran: Most people, most people don’t. Yes, no, Dick would never employees. Well, Dick does have his own team, but he started as a brokerage shop and got into investing. So Dick’s cooperation initially, was a marketing and brokerage shop that he then, you know, made a bunch of money doing fees most more often than not. It’s a third party service.
108 00:20:51.300 ⇒ 00:21:08.560 Uttam Kumaran: But he now he does have, he is vertically integrated to your point. Now, the answer on this side is different. Again, if Britney were here this the way, I would describe this, just to use common terminology, is this person. So tenants are typically because it’s a big purchase. You’ve been through it with all kinds of
109 00:21:08.820 ⇒ 00:21:16.719 Uttam Kumaran: confusing both economics like holy Shit. This is 5, 10 million bucks, or whatever it is, over 10 years. And all of this
110 00:21:17.240 ⇒ 00:21:19.260 Uttam Kumaran: complexity of building house.
111 00:21:19.930 ⇒ 00:21:24.469 Uttam Kumaran: This person really is a consultative advisor
112 00:21:24.710 ⇒ 00:21:35.420 Uttam Kumaran: to help guide you in in meaningful ways. And one of those is in this document. And Britain used to do this job. And specifically.
113 00:21:35.470 ⇒ 00:21:46.350 Uttam Kumaran: Scott, this is the process of interviewing this person and determining their requirements. 95% of people who start looking for office don’t really know what their requirements are.
114 00:21:46.500 ⇒ 00:21:58.930 Uttam Kumaran: So you have to interview and say. how many people do you really want? What are the what are the work styles? Do you need? How much ratio meeting room do you want for office? Do you want like want to? Lots of private space?
115 00:21:59.030 ⇒ 00:22:06.940 Uttam Kumaran: What are your financial parameters to you, either? We’re in a workplace, Hazel, do you want to pay higher annual rents with more options to get out?
116 00:22:07.670 ⇒ 00:22:09.750 Uttam Kumaran: It’s an educational
117 00:22:09.830 ⇒ 00:22:19.750 Uttam Kumaran: process of iteratively extracting and interviewing, and literally takes the form of interviewing. You’ll see forms.
118 00:22:20.230 ⇒ 00:22:31.820 Uttam Kumaran: and there’s all kinds of these tools. These fast tools were. Fill this out. Then the architect Scott will send over these forms. This is what Rick usage is called space planning. So space planning is
119 00:22:32.150 ⇒ 00:22:39.610 Uttam Kumaran: one step up screen from architecture. It’s interviewing the client to figure out what they want
120 00:22:39.740 ⇒ 00:22:42.420 Uttam Kumaran: and help get a first estimate on budget.
121 00:22:43.810 ⇒ 00:22:49.499 Uttam Kumaran: right? So it’s all the stuff. One step upstream from an architect.
122 00:22:49.690 ⇒ 00:22:57.540 Uttam Kumaran: So, for everybody wants along with everything. I’m blah blah, but they only want to spend this much per square foot. So helps.
123 00:22:57.970 ⇒ 00:23:01.379 Uttam Kumaran: Anyway, you know what you know what you’re looking at is.
124 00:23:01.610 ⇒ 00:23:06.870 Uttam Kumaran: you know, way too much. You’re gonna double. You’re gonna break your budget by 1 million bucks. that’s all.
125 00:23:06.940 ⇒ 00:23:15.040 So the way that’s done today. Us Jll. And Cpr.
126 00:23:15.530 ⇒ 00:23:31.630 Uttam Kumaran: They have teams inside those firms that do that work. Yes. for big enterprises, and they do them for big enterprises bigger than you and me, Scott, and people that are leasing, you know, 500,000 support. There’s whole teams for Google, like J. Lo.
127 00:23:31.720 ⇒ 00:23:37.100 Uttam Kumaran: and that additional set of services. Sometimes they’ll throw that kind of stuff in
128 00:23:37.140 ⇒ 00:23:55.390 Uttam Kumaran: for a new client. So this is the kind of value I stuff as an enterprise company. You do to get a big client. So that is a little different. It’s like layered on services. And there’s a hit, because that’s what that’s Brittany’s thesis. She thinks that if you deliver that the AI, together with a broker like that’s a big idea. So
129 00:23:55.580 ⇒ 00:24:25.470 Uttam Kumaran: ultimately, you said that the tenant broker is much more favorite or important. Is it like? So my perspective on this is that both parties, the key to both parties is market knowledge like what is market today. Cause, if you’re leasing a space today versus leasing a space 2 years ago could not be more different. Market environment, the terms you’re gonna get from what landlords are willing to do is completely different. What tents are looking for. So
130 00:24:25.470 ⇒ 00:24:35.329 th these people are in the marketplace. They know what’s market. They know what market terms are for Ti, and what market terms are for Brand. They know where to push.
131 00:24:35.330 ⇒ 00:25:00.050 Uttam Kumaran: and so that’s their value again to me as a landlord. I don’t have time to study the Mark Office market all day. No, we’re rates should be in Southeast awesome, for here’s a way to talk about that. And this is so. Take the listing database and soliciting database to Google put in. Let’s call it the formalized
132 00:25:00.450 ⇒ 00:25:01.560 Uttam Kumaran: knowledge
133 00:25:01.850 ⇒ 00:25:11.750 Uttam Kumaran: brokers you can think of as a cloud of people who almost all know each other. They’re fucking incredibly social.
134 00:25:12.530 ⇒ 00:25:40.090 Uttam Kumaran: Justin, even Justin aside. So II picked up 2 books about brokers, thinking I would learn a little bit about commercial real estate financing, and most of the book was like How to do sales skipped it on like this is like how to do, how to convert a lead to a yeah. I was really surprised.
135 00:25:40.170 ⇒ 00:25:49.089 Uttam Kumaran: Right? Super high issue just each other. And they gossip about shit constantly. So it’s not in the database yet.
136 00:25:49.090 ⇒ 00:26:13.859 Uttam Kumaran: articulate, so I don’t.
137 00:26:13.860 ⇒ 00:26:20.279 Uttam Kumaran: I don’t know how you recreate it, anyway. So that’s a bit of that. And then just
138 00:26:21.920 ⇒ 00:26:29.310 Uttam Kumaran: this, it’s this is a power law distribution. You know, world just like almost everything else where
139 00:26:29.790 ⇒ 00:26:31.679 meaning this 80 20 rule
140 00:26:31.930 ⇒ 00:26:42.969 Uttam Kumaran: that 80% of the square footage revenue comes from 20% of the deals. said another way. There’s a small number of really big leases and a really large number of
141 00:26:43.480 ⇒ 00:26:53.219 Uttam Kumaran: small leases, and so that it forms the economics right? And so what people tend to do is optimize for the long ones depending on your asset. Right?
142 00:26:53.450 ⇒ 00:26:59.649 Uttam Kumaran: You might have an asset that’s in the middle of Flutter Bill, that’s all chopped up for specifically for the long tail
143 00:26:59.890 ⇒ 00:27:05.599 Uttam Kumaran: and fun. But most people would prefer strongly prefer
144 00:27:05.650 ⇒ 00:27:07.969 Uttam Kumaran: bigger, longer, or shorter.
145 00:27:09.090 ⇒ 00:27:19.459 Uttam Kumaran: And that goes back to the financial model, because now you have 10 years of revenue and your cash flow versus free. and that is high quality revenue, meaning the credit of that company
146 00:27:19.500 ⇒ 00:27:21.279 Uttam Kumaran: is a one credit.
147 00:27:21.520 ⇒ 00:27:52.369 Uttam Kumaran: So, gentry, we’ll spend a lot of time looking at financials, saying, sorry we can’t cause our price. I mean, you want an anchor. 10. So this cut. This cuts both ways. So you do want an anchor tenant with high credit to take down as much space as possible in your asset. But for everyone else, you want to have diversification again. If Google says, I’m out on this whole building. I mean congrats you Google credit. But unless it’s Google credit, you want your anchor tenant to take down a good chunk. But you wanna lease your whole building to a mid credit tenant.
148 00:27:52.370 ⇒ 00:27:59.610 Uttam Kumaran: So you wanna have an 8 or 10 that takes on, you know. Call it 30 to 40% of your building. And then you fill this, you know, 70 to 60 with.
149 00:27:59.730 ⇒ 00:28:12.320 Uttam Kumaran: So now 15 year 10 building
150 00:28:12.380 ⇒ 00:28:16.550 Uttam Kumaran: exactly as he’s saying, and then the rest, we can use the game theory. And
151 00:28:44.990 ⇒ 00:29:17.119 Uttam Kumaran: so, anyway, here’s a trillion, you know, much deeper, and like massive talking market all kinds of detail here, but it’s not. It is very like market dynamic driven, though, like, I mean, currently same activity in Austin, we’re at 30% vacancy between direct and and suddenly vacancy. So we just a glut of vacancy. And right? And yeah, pre, Covid is always running very tight, like, sub 10%. Right now, we’re 30 gross between both, and
152 00:29:17.250 ⇒ 00:29:26.239 Uttam Kumaran: you know you can’t get you like. No one wants to touch office with a 10 foot pole right now is the the long and short of it. So it’s been.
153 00:29:27.440 ⇒ 00:29:36.409 Uttam Kumaran: it’s very interesting market especially. I mean, it’s it’s about the same San Francisco, New York, everywhere else. But
154 00:29:36.750 ⇒ 00:29:46.689 Uttam Kumaran: th. There’s unique opportunities presented by in a obviously, when we were doing swivel, we were operating in the tightest of all type markets. Austin circuit 2,019 was as tight as it comes.
155 00:29:46.820 ⇒ 00:30:01.859 Uttam Kumaran: So now you’re operating in the market with 30 plus vacancy and tons of quality product that’s just sitting there. And so different set of opportunities for different market environments is something to keep in mind like it’s just opportunities are gonna look different.
156 00:30:01.910 ⇒ 00:30:14.310 Uttam Kumaran: Just a few other slices that just, and then we’ll change gears. The markets divided into 3 classes, A, B and C in this kind of downtown. Fancy see being shady, suburbia.
157 00:30:14.380 ⇒ 00:30:23.009 Uttam Kumaran: And you know, they just they’re just they have different multiples when you buy and sell them. Yeah. And they all have their own unique market dynamics right?
158 00:30:23.430 ⇒ 00:30:30.880 Uttam Kumaran: A little better to be in Class B and C. Right now, you know why people move in the suburbs downtown.
159 00:30:31.240 ⇒ 00:30:34.209 Uttam Kumaran: okay, that’s that’s
160 00:30:34.420 ⇒ 00:30:40.750 Uttam Kumaran: that part, and so did we lose it. Yeah, we did right.
161 00:30:41.390 ⇒ 00:30:48.120 Uttam Kumaran: Kicked over to airplane. Now, I just need to do drag it over.
162 00:30:49.180 ⇒ 00:30:55.519 Uttam Kumaran: You present it, put in present mode, it should go to like.
163 00:30:57.880 ⇒ 00:30:59.400 Uttam Kumaran: that’s my extraordinary.
164 00:31:07.170 ⇒ 00:31:08.070 huh?
165 00:31:12.180 ⇒ 00:31:14.720 Uttam Kumaran: Okay, so
166 00:31:17.220 ⇒ 00:31:19.670 Uttam Kumaran: you know.
167 00:31:20.510 ⇒ 00:31:30.659 Uttam Kumaran: obviously, a million more things to do. But try. Not worth. So unless there are specific things you want to drill into. What I was going to ship now is a little bit more to the
168 00:31:30.910 ⇒ 00:31:37.470 Uttam Kumaran: when I think of this kind of the knowledge content of some of these things like, who’s doing, what are they doing? What information do they need?
169 00:31:37.630 ⇒ 00:31:42.350 Uttam Kumaran: Obviously anticipate things? We could then automate and build company stuff.
170 00:31:44.390 ⇒ 00:31:49.179 Uttam Kumaran: And so to do that, we started to do that. The documents is to
171 00:31:49.680 ⇒ 00:32:05.419 Uttam Kumaran: one of the things I like to do when I think about these AI things is, look at the documents that undergo these processes. II don’t know if it’s completely instructive, but like any workflow. You can study those documents right? We you know what’s in that spreadsheet. What’s in that contract?
172 00:32:05.790 ⇒ 00:32:14.530 Uttam Kumaran: What’s in an loi? Lo! Each lease has an Loi or Rfp. In a proposal they go back and forth. Those tend to be.
173 00:32:14.550 ⇒ 00:32:19.379 Uttam Kumaran: If we went across the street to see, you know they have 50,000 of them.
174 00:32:19.820 ⇒ 00:32:25.420 Uttam Kumaran: Scott. They look like term sheets on a financing. Yeah. Summary terms.
175 00:32:25.730 ⇒ 00:32:28.630 Uttam Kumaran: Not buying. Yeah. Yeah.
176 00:32:29.740 ⇒ 00:32:46.060 Uttam Kumaran: The architectural artifacts. Right? Start with something as simple as a floor plan. It’s just like, literally a floor plate. and said, this is the picture of your space. That architectural floor plan is usually on the listing
177 00:32:46.760 ⇒ 00:32:51.219 Uttam Kumaran: I should have back back up. The listing is the first. So listing is a Pdf.
178 00:32:51.340 ⇒ 00:32:56.340 Which is a marketing document that goes into that database I mentioned, and it would just have the
179 00:32:56.480 ⇒ 00:33:16.640 Uttam Kumaran: information, yeah, address and picture of the building. And it’s your flyer, your marketing market, your home. Yeah, like, he demographic information for office, you know, like what’s nearby. There’s good restaurants. Here’s our vacancy. They send you the CAD file for the floor plan. So the CAD interesting.
180 00:33:17.890 ⇒ 00:33:21.310 Uttam Kumaran: there’s a whole. So I didn’t try not to be up to this year. So
181 00:33:22.760 ⇒ 00:33:47.970 Uttam Kumaran: at the when you’re marketing it, you have something. You have a Pdf of CAD from somewhere. So I look I there’s a so there’s a building on East Side. There’s like a huge office part building on East Austin, near my gym, that’s opening. Yeah. So I went through the entire thing. I even tried to contact them to see whether they’re not get back to me by anything but like, there’s just a Pdf, yeah. But I’m like.
182 00:33:47.970 ⇒ 00:33:58.119 is this all you get? If I was interested in office, what do I do with this? Pdf. Of like had to be 1015 years old, and then not even act.
183 00:33:58.120 ⇒ 00:34:22.480 Uttam Kumaran: And so that deals. Funny that they’re not entertaining. This is under 200,000 feet, and there’s not a deal in market over 30,000 feet like there’s no looking in Austin over 30,000. So they basically built it speculatively for Elon to put Tesla there. And if he doesn’t like he, he has all the leverage in the world with Tesla there. But if he doesn’t, that’s exactly the metadata that I mentioned
184 00:34:22.480 ⇒ 00:34:42.800 Uttam Kumaran: the knowledge behind. Why, that has to spare what the strategy for the asset was like that. You get that from a phone call and email somewhere, because we’re building 290 units. So I know everything about that project because of building multi next door. And because
185 00:34:42.800 ⇒ 00:34:55.830 Uttam Kumaran: I have to do because your friend worked over it. So yeah, it is. Yeah, exactly. It was from brokers. That’s all. Broker. Speak, yeah, but it’s an insanely good. So I don’t know what to do about it, but that there’s this pass it knowledge
186 00:34:55.889 ⇒ 00:35:05.619 Uttam Kumaran: which is never written down anywhere. It’s not in any it system. But I’m just pointing out that it’s there. If you Google, Springdale Green, Elon, with something come up. No, okay.
187 00:35:06.160 ⇒ 00:35:20.850 Uttam Kumaran: the CAD, though there is a so just to peel up back the CAD later, a little bit further. The CAD, we say, CAD is autocad is standard tool. It’s the tool a architect used to design space.
188 00:35:21.100 ⇒ 00:35:31.770 Uttam Kumaran: The specific tool they generally use within the it’s optimized. And they’re different versions. But, Rev. It is specifically for
189 00:35:32.320 ⇒ 00:35:34.220 Uttam Kumaran: commercial office lab and stuff.
190 00:35:34.370 ⇒ 00:35:49.269 Uttam Kumaran: You can do a really quick and dirty rabbit sketch. which is what it would sound like, I just want to show you roughly to the floor plan and 2 or 3 things that we could do. It’s not a complete tab. But I haven’t.
191 00:35:49.530 ⇒ 00:35:54.919 Uttam Kumaran: As an architect. What architects do is they sit down. They basically engineer the whole
192 00:35:55.070 ⇒ 00:36:09.409 Uttam Kumaran: materials plumbing hbic. There’s a layer. So if you if you go in a cat, file their layers for each one of these things, and each layer has all the has. The bill. Materials are 78 linear feet of this and 97 and
193 00:36:09.820 ⇒ 00:36:17.980 Uttam Kumaran: and then usually that has to be given to someone to cost each one of those line items out. Anyway, we would deepen a rat hole.
194 00:36:18.710 ⇒ 00:36:45.759 Uttam Kumaran: So that’s what it lies at the heart of everything before you can actually permit it and construct it. And that process all is controlled entirely by the architect. So you might have a building architecture record. You might have attendance. Architect like Facebook might hire Guinsler to build out their that space. And so you’ll those 2 architects that entire process contains half the hired architect. And then you need to permit to do it. And gentry, for example, like this building couldn’t
195 00:36:45.810 ⇒ 00:36:55.490 Uttam Kumaran: do construction without a permit permit stuck in the city, Boston, just like you do for rescue, and it has to have an architect. Stamp. Yes, on a cat file, saying.
196 00:36:55.550 ⇒ 00:37:05.100 Uttam Kumaran: the early in the process
197 00:37:05.360 ⇒ 00:37:16.840 Uttam Kumaran: people will run estimates like a cost estimate. Just like if you rent a house. he said. Look, here’s the rough floor plan. I’ll make some notes on it high and cabinetry blah blah blah! But you don’t do the whole
198 00:37:16.870 ⇒ 00:37:19.250 Uttam Kumaran: design, and good architects know.
199 00:37:19.750 ⇒ 00:37:31.930 Uttam Kumaran: That’s about 20 bucks. So they’re not going down to the billing materials and kind of counting. They’re just kind of going. Okay. That looks like this class of materials. And okay, and then I’ll give you a range. So go, you can do this
200 00:37:31.970 ⇒ 00:37:35.120 Uttam Kumaran: space for a hundred 50 bucks to 190 bucks.
201 00:37:35.420 ⇒ 00:37:55.020 Uttam Kumaran: That’s what they do for Esther cost estimating. Yeah. And this goes back and forth and back and forth, and the tenant brokers are going. And then the test go long and remember negotiating
202 00:37:55.510 ⇒ 00:38:09.719 Uttam Kumaran: the landlord paying the potential tenant stipend, basically for some amount. So let’s say, gentry goes. Okay, I’ll give you whatever 80 bucks for right? And the guys now got this iterative thinking article. What says 120?
203 00:38:09.870 ⇒ 00:38:19.300 Uttam Kumaran: And Jeffrey go? I guess you’re you got paid. And now the guy changes this to like fuck. Jeffrey’s only paying his 80, and then he goes back to the architect, and
204 00:38:19.390 ⇒ 00:38:22.039 Uttam Kumaran: he’s up to great. And now the architect’s like well.
205 00:38:22.100 ⇒ 00:38:45.159 Uttam Kumaran: broker.
206 00:38:45.200 ⇒ 00:39:05.409 Uttam Kumaran: the broker
207 00:39:05.620 ⇒ 00:39:28.179 Uttam Kumaran: broke like it’s a terrible like games, and everyone else sure but like, unless you own the firm, like the architects doing the work or not getting paid. They are. It’s it sucks I ever never like. Yes, every architecture get into real estate. That’s my personal opinion. But anyways so, but that process is is broke as
208 00:39:28.290 ⇒ 00:39:57.829 Uttam Kumaran: shit like it’s bad, and it’s it’s bad for everyone. It’s inefficient for for everyone. And again, the easiest way for this to happen is for the landlord, the tenant, you know. Scott’s gonna get here. But, like the tenant communicates what they’re looking for. The landlords comes up with a cost, effective way to do that with their building architect and their Gc. And they deliver some sort of term key space for that tenant. But the tenants, when they have control and they have their own architect, it always gets away from them. And it’s it’s a mess.
209 00:39:57.980 ⇒ 00:40:05.810 Uttam Kumaran: So what I’d like to do is in Brittany. Put this together, and she’ll be here in a couple of minutes.
210 00:40:06.730 ⇒ 00:40:07.760 and
211 00:40:07.790 ⇒ 00:40:15.229 Uttam Kumaran: I’m not very this. Obviously, where there’s a million ways to do this. But just the way I think I like to think about documents and person’s.
212 00:40:15.630 ⇒ 00:40:22.830 Uttam Kumaran: and just kind of go through the process and go. Okay, which persona is doing? Which piece of the knowledge work?
213 00:40:23.270 ⇒ 00:40:38.029 Uttam Kumaran: And how is that knowledge codified? Right? Is it? Is it codified in a, in a. in a cat system like Rivet? Or is it a 4 min like so that we can then go through it and start to look at through the lens like
214 00:40:38.060 ⇒ 00:40:47.399 Uttam Kumaran: you could do that with, yeah, we tried to do this with at at Swivel and a lot of these things. All you can really do is just take a document, a workflow to the next guy. Yeah.
215 00:40:48.180 ⇒ 00:40:52.049 Uttam Kumaran: so and work and Sas is really good at workflow. You can go. Hey, architect.
216 00:40:52.410 ⇒ 00:41:03.160 Uttam Kumaran: do this and have it electronically. Show up the tenant, you know. You know what I mean like a real simple workflow. It doesn’t fucking make it that much better. But some of this stuff you could almost completely do
217 00:41:03.220 ⇒ 00:41:05.570 Uttam Kumaran: so again. Back to Brittany’s thesis.
218 00:41:05.850 ⇒ 00:41:14.160 Uttam Kumaran: A lot of the early architectural estimation I mentioned you could probably do with just natural language, driven
219 00:41:14.280 ⇒ 00:41:24.220 Uttam Kumaran: a virtual auto pad and a tool to extract requirements from the tenant like you could probably just do that completely. You know, it would just be the estimation piece, you know.
220 00:41:24.580 ⇒ 00:41:28.530 Uttam Kumaran: because the the final piece has to be stamped on architect, and
221 00:41:28.740 ⇒ 00:41:44.349 Uttam Kumaran: you know, they’re not gonna let up. So that’s just. But that’s just one example. Right? So anyway, Britney started this, I don’t get a chance to look at it. Yeah. And she’s right, she’s focused on these 4. I think there’s probably more
222 00:41:44.630 ⇒ 00:41:46.869 Uttam Kumaran: documents. I think the 5 more like 10.
223 00:41:47.060 ⇒ 00:41:53.930 Uttam Kumaran: So what I wanna do is build, just build this out and kind of go through and say, Who who is it? How’s it? Build?
224 00:41:54.050 ⇒ 00:41:56.620 Uttam Kumaran: What tools, Bill? What’s the knowledge?
225 00:41:56.910 ⇒ 00:42:02.649 Uttam Kumaran: And then what I want to do is to look at AI and go okay, where? Where? Today? I’ll just
226 00:42:03.380 ⇒ 00:42:25.959 Uttam Kumaran: you know, Redo, that. Or you know, I also almost wanna look at. Who cares that this step gets eliminated like the one thing it’s hearing? I. This conversation is helpful to hear both sides about like this person doesn’t like this process. This person needs this educational process right? Like, understand the trade off like, even if you could automate it, is it like, okay, fine.
227 00:42:25.970 ⇒ 00:42:34.220 Uttam Kumaran: You say 2 cents. And nobody cares or like, you know, did you unlock some big total value? Yeah. So
228 00:42:34.290 ⇒ 00:42:44.180 Uttam Kumaran: and even even proving that right. It’s like one thing I wrote down is like one thing that may be helpful is to do like a retro of one of these deals to look at. If you were to do it again.
229 00:42:44.430 ⇒ 00:42:51.029 Uttam Kumaran: was it like, okay, we should have dedicated less people to this because sped up this by 30% of this
230 00:42:51.080 ⇒ 00:42:55.430 Uttam Kumaran: sort of document was produced or translated, or we just missed the meetings.
231 00:42:55.550 ⇒ 00:43:11.050 Uttam Kumaran: Or if we had extracted 3% more here. Something like that right?
232 00:43:11.570 ⇒ 00:43:20.179 Uttam Kumaran: You know that story from that is, yeah. I think I mentioned last time. Yeah, we like got $90 in Ti from the landlord time to 7 year lease.
233 00:43:20.360 ⇒ 00:43:44.719 Uttam Kumaran: Our build out was easily every bit of $150 a foot, and our tenure rep told us the whole time. Oh, there’s no way that you all are doing super budget like we interface with the architect. They were like, oh, we’re gonna go budget everything, budget everything. There’s no way. You’ll be that much higher than 90 bucks foot, and we’re every bit of like 1 56 and so my boss struck stroke check for Delta between 90 and 1 56
234 00:43:45.150 ⇒ 00:43:56.099 Uttam Kumaran: was that our suite is 3,300 300 square feet so pretty small. But still, you know, it’s a real chat right now.
235 00:43:56.100 ⇒ 00:44:15.280 Uttam Kumaran: but it’s off by so 70 bucks
236 00:44:15.390 ⇒ 00:44:17.980 Uttam Kumaran: that’s part of the nature of construction is
237 00:44:18.820 ⇒ 00:44:36.470 Uttam Kumaran: estimating any construction. It’s it’s an unknown thing right. The builders like I don’t know what you want like as far as hired back to yours. Was it choices you made or unseen cost increases? It was unseen cost increases, so we signed our lease. In October of 2020
238 00:44:36.690 ⇒ 00:44:45.950 Uttam Kumaran: we started our build out in, you know, fall of 21, and then we moved in in July of 22, so you can imagine. During that time it was
239 00:44:46.490 ⇒ 00:45:08.909 Uttam Kumaran: absolute pay and modium in the market, and prices or costs like pure material costs, just skyrocketed. So it also was bad negotiating by our tenner to not give us more tis, considering those market implications, considering that cost per increasing, you shouldn’t negotiate the higher Ti allowance for that space, considering that we did go pretty budget on most of our finishes.
240 00:45:09.060 ⇒ 00:45:14.399 Uttam Kumaran: But I think it’s most. It was mostly a market. Dynamics issue
241 00:45:14.460 ⇒ 00:45:22.190 Uttam Kumaran: like our timing with materials. Would you have revised like what happens if he had halfway like
242 00:45:22.260 ⇒ 00:45:44.919 Uttam Kumaran: like there’s some marking conditions. Well, we we cut again direct, indirect lighting in every every office. We switch it to just direct, to like, see how this goes up and down, so there would have been opportunity to right, and we got it down to like 1 56, but
243 00:45:45.900 ⇒ 00:45:57.559 Uttam Kumaran: still one more so anyways like process wise that was, that was a disaster. And I think it was equal parts.
244 00:45:57.710 ⇒ 00:46:03.710 Uttam Kumaran: the tenant, the tenant rep, who didn’t understand market lease terms. And then
245 00:46:04.390 ⇒ 00:46:24.330 Uttam Kumaran: so one way from 10,
246 00:46:24.570 ⇒ 00:46:39.740 Uttam Kumaran: right by definition, they need to be extracted. You know, normal 10 doesn’t know what no work is. They don’t know how many square feet. They need per employee, or you know, I don’t know. Do any other square feet. What’s that even fucking mean? Right? So what had needs to happen is, you can’t just ask them
247 00:46:39.920 ⇒ 00:46:52.539 Uttam Kumaran: 10 questions. What you typically have to do is show a picture. and they go on one bigger than that. Or I want that looks cheap, right? So it’s an iterative process. But so there’s an inner process of discovering requirements.
248 00:46:52.990 ⇒ 00:47:03.849 Uttam Kumaran: We also often have to see a size of a space. Understand how much. There’s a database of knowledge about materials, costs, and the cost to build things.
249 00:47:04.000 ⇒ 00:47:14.069 Uttam Kumaran: and that would be both a construction cost. But most of this materials. Yeah, to his point. The shit swings like unbelievably like the cost of you could.
250 00:47:14.230 ⇒ 00:47:19.610 Uttam Kumaran: All kinds of wacky reasons could swing. And that’s a big number, by the way, just the lighting on the space.
251 00:47:20.000 ⇒ 00:47:44.210 Uttam Kumaran: you know.
252 00:47:44.700 ⇒ 00:47:50.800 Uttam Kumaran: Process starts with estimation and ends with a stamped
253 00:47:51.090 ⇒ 00:48:05.999 Uttam Kumaran: set of drawings and the drawings get a permit are permitted. and then people start swinging. So Brittany’s theory that she’s articulated
254 00:48:06.030 ⇒ 00:48:08.730 Uttam Kumaran: is it’s this phase only
255 00:48:10.880 ⇒ 00:48:24.820 Uttam Kumaran: that you could deliver via AI combine it with the actual. I’m searching for an office like the searching process, and deliver every differentiate experience. That’s her pieces.
256 00:48:27.510 ⇒ 00:48:28.390 So
257 00:48:29.030 ⇒ 00:48:33.699 Uttam Kumaran: what she wants to do. Brittany is to merge a tenant broker and a space planner.
258 00:48:37.410 ⇒ 00:48:40.259 Uttam Kumaran: II may be oversimplifying, but I don’t think so.
259 00:48:45.790 ⇒ 00:48:47.300 Uttam Kumaran: It’s not.
260 00:48:48.640 ⇒ 00:48:53.860 Uttam Kumaran: I think it’s an interesting concept. I mean you, you you’re back to your
261 00:48:54.380 ⇒ 00:48:59.809 Uttam Kumaran: supply and demand issue right? Like, if you’re if you’re replacing the tenor app with AI,
262 00:48:59.940 ⇒ 00:49:12.149 you know, where? Where are they able to access all the listings and that gets back to coast are problems, and it gets back to, I think the simplest assumption is that they have a license and they are a broker, and they get it from coastal.
263 00:49:12.550 ⇒ 00:49:13.340 Uttam Kumaran: Okay?
264 00:49:14.250 ⇒ 00:49:21.170 Uttam Kumaran: In other words, they have no advantage. Right? They get the listings from the same place so real.
265 00:49:21.380 ⇒ 00:49:29.250 Uttam Kumaran: I think there are ways to change that over time. But let’s just start with that. Yeah. So you hire schedule, or you know, somebody with a license.
266 00:49:29.760 ⇒ 00:49:34.170 Uttam Kumaran: And just so you’ve got the license meaning you can. You can get co-star.
267 00:49:34.510 ⇒ 00:49:38.480 Uttam Kumaran: but all the work is done by AI. You never hire a broker
268 00:49:40.210 ⇒ 00:49:40.980 next year.
269 00:49:42.180 ⇒ 00:49:51.489 Uttam Kumaran: so I think what she wants to do is to take the super high value. Add experience. You get a jll, which, again, is reserved for people who square feet
270 00:49:51.560 ⇒ 00:49:58.260 Uttam Kumaran: and just, we’ll throw money at these deals and deliver it to the mainstream market, using AI, okay.
271 00:49:59.160 ⇒ 00:50:04.710 Uttam Kumaran: and get rid of. I think it’s that’s tough, because how do you prove that it’s like.
272 00:50:04.890 ⇒ 00:50:09.179 Uttam Kumaran: I don’t know how often you may go through that. But how do you prove? It’s a better experience.
273 00:50:09.240 ⇒ 00:50:21.819 Uttam Kumaran: if like. I don’t know how much of the folks renting office space are first time versus otherwise. Right. It’s if you have a series of deals you’re doing, it’s easy to prove that the cost is now lower. It’s the one time you’re buying
274 00:50:22.140 ⇒ 00:50:38.220 Uttam Kumaran: office space. I don’t know how well it wouldn’t be, so let’s so here, cause I’m articulating kind of her theory, so I hope I hope she agrees with it she gets here, but the idea would be, there’s an experience you can get if you’re Boeing
275 00:50:38.610 ⇒ 00:50:43.360 Uttam Kumaran: or Bank of America. A big customer like you get all of these special.
276 00:50:43.420 ⇒ 00:50:52.210 Uttam Kumaran: You get space planning, you get all show, you all alternatives and all this advantage for you. The average guy doesn’t get any of that
277 00:50:52.390 ⇒ 00:51:07.659 Uttam Kumaran: he just gets a bunch of generic listings out of co-star, and somebody go. Which one do you want? And I think Britti’s theory is, AI allows you to deliver the okay. Yes, premium experience
278 00:51:08.230 ⇒ 00:51:21.259 Uttam Kumaran: the 10 to 15 year, Mac Daddy’s and deliver that market at probably a lower cost. But the just on a little bit cheaper as a broker. The differences what I deliver meaning my AI penny
279 00:51:21.410 ⇒ 00:51:34.969 Uttam Kumaran: is everything in more than Jl. Could do, and just without a with all the extra price. I think that’s the deal. So so you’re you’re articulating this as a tool for small to mid market brokers.
280 00:51:35.160 ⇒ 00:51:41.760 Uttam Kumaran: It depends. I just started right? That’s what I was. Gonna ask, who buys? Let’s say, you have this agent? Yeah, who buys it?
281 00:51:42.300 ⇒ 00:51:46.840 Uttam Kumaran: Okay. So there are 2 or 3 options.
282 00:51:47.140 ⇒ 00:51:58.340 Uttam Kumaran: one of them which I hate and I’m not gonna do. So I just put that up there at the beginning is to sell this to brokers number one. Brokers have no money, and they’re fucking like life’s too short.
283 00:51:58.500 ⇒ 00:52:08.009 Uttam Kumaran: A better way to do it is to go in each city and hire the smartest bucket broker, because there’s people like him and you go congratulations.
284 00:52:08.270 ⇒ 00:52:19.410 Uttam Kumaran: We have identity in Texas and or wherever, and you’re my only broker. So we are a brokerage. one human being and 1,000 AI brokers.
285 00:52:19.790 ⇒ 00:52:32.289 Uttam Kumaran: Technically, it’s it’s like the next iteration of technical bro but it is a brokerage. There is one human broker, and the third option is to go buy an existing brokerage.
286 00:52:32.530 ⇒ 00:52:39.780 Uttam Kumaran: So, for example, there’s a brokerage in town, you know this guy. Well, his name is Chad Jewel. He runs Austin office space.
287 00:52:39.790 ⇒ 00:52:42.590 Uttam Kumaran: It’s a very low end.
288 00:52:43.220 ⇒ 00:52:51.150 Uttam Kumaran: he gets all these from a website. his biggest biggest. He bought the Austin office space URL in 2,001.
289 00:52:52.140 ⇒ 00:53:15.450 Uttam Kumaran: I’m surprised he still wants to run the brokers, so you should, you know, trade for very much.
290 00:53:15.600 ⇒ 00:53:23.149 Uttam Kumaran: and we’ll just strip out your most of your brokers and do it all the day I go on board. So there’s 2 or 3 different ways to do it.
291 00:53:23.610 ⇒ 00:53:31.630 Uttam Kumaran: Another alternate, which is what I won’t do is to go to every brokerage, and there are thousands in the Us. And go, hey? License, my AI co-pilot!
292 00:53:32.240 ⇒ 00:53:34.309 Uttam Kumaran: And like I said, they had no money.
293 00:53:35.180 ⇒ 00:54:04.879 Uttam Kumaran: They are not going to give you any of their whole revenue stream.
294 00:54:05.830 ⇒ 00:54:17.399 Uttam Kumaran: Terrible idea! Test in the world. Brokers should be run out of business solar copilots. So that’s just fine.
295 00:54:17.520 ⇒ 00:54:44.659 Uttam Kumaran: And someone’s already doing like build out, or one of the people who has spent energy. A bunch of people will try it. Yeah, they’re they’re all the guys who already have the and again discuss point. They have no money like the money that they’re spending is coming from the land. Congratulations. You signed up 2,000 brokerage firms. You got a nice little 4 billion dollar error
296 00:54:44.970 ⇒ 00:54:51.710 like anthem. IQ. Is a company here in Austin, started by a few Austin real estate brokers
297 00:54:51.790 ⇒ 00:55:16.439 Uttam Kumaran: that has struggled, to say the least, because they’re selling broker by broker. Yeah, they’re literally calling individual brokers and trying to get them. Yeah. But I think that’s pretty common. It’s that’s people are starting companies that’s but especially in an industry like ours, where it is pretty.
298 00:55:16.560 ⇒ 00:55:30.959 I’m good good to see you. Sorry about. I hope, Brady nice to meet you. What’s up, Brittany? How are you?
299 00:55:30.960 ⇒ 00:55:55.519 Uttam Kumaran: Because we’ve been talking about?
300 00:55:55.520 ⇒ 00:55:58.700 This idea, which I think is kind of yours.
301 00:55:58.710 ⇒ 00:56:14.339 Uttam Kumaran: that you know, we kind of been put in the docs. Which I may or might not capture correctly. So here’s how I’m gonna describe it. Okay, if you take all of these value added services like A. J. Lo would do like space planning how they help
302 00:56:14.570 ⇒ 00:56:22.119 Uttam Kumaran: tenants understand what they need. They show them what they can afford. It’s a that. They have teams. Brittany’s to do this for a job.
303 00:56:22.420 ⇒ 00:56:29.329 Uttam Kumaran: These people are designers and professionals doing this. It’s the step right before the final architectural design is to sort of get
304 00:56:29.400 ⇒ 00:56:36.910 Uttam Kumaran: the parties align and combine that with actual doing. The tenant brokerage, the part of
305 00:56:36.930 ⇒ 00:56:50.699 Uttam Kumaran: we are always working on behalf of the broker, like the broker, led the entire. They were a separate business unit, if you will, within Jl. And the big, really big tenants are called occupiers in Jl. Land.
306 00:56:51.020 ⇒ 00:57:07.220 Uttam Kumaran: Did you charge yet? Try charging separately, or did consulting Fee? Right? So they come along and say, Hey! Back to America! You should hire us to do space planning, and they have so much money they’re like, sure. Why wouldn’t we just cover it? So what we’re saying is, what if you combine that
307 00:57:07.430 ⇒ 00:57:16.410 Uttam Kumaran: with with appropriate and deliberate instead of like to the massive customers like, you know, every manual is that
308 00:57:16.430 ⇒ 00:57:18.499 Uttam Kumaran: that was the kind of what you’re
309 00:57:18.510 ⇒ 00:57:33.640 Uttam Kumaran: yeah, the the I tried to simplify and saying, making business owners, cra expert, meaning like, you don’t have to hire the broker, the project manager all these people upfront just to find in secure space.
310 00:57:33.880 ⇒ 00:57:37.549 Because you can manage that whole workflow.
311 00:57:37.710 ⇒ 00:57:38.540 Uttam Kumaran: Okay.
312 00:57:39.870 ⇒ 00:57:50.249 Uttam Kumaran: obviously, I’m glad I didn’t. So and so we probably spent the last 10 min sort of talking. So that’s where we’re at
313 00:57:50.760 ⇒ 00:57:58.930 Uttam Kumaran: And the a good question that was just asked was, Well, what should go to market for that. So let me catch up on that and get me to control. So
314 00:58:01.200 ⇒ 00:58:12.370 Uttam Kumaran: my, or, in other words, how do you get in that business. Well. I kind of laid out, but I think there are 3 options. One of them is you can just. You can make a kind of an AI thing and sell it to brokerages.
315 00:58:12.780 ⇒ 00:58:14.330 Uttam Kumaran: I don’t like that option.
316 00:58:14.610 ⇒ 00:58:28.629 Uttam Kumaran: I just think brokers under buying anything they don’t have much money to buy things with, and I don’t like brokers, anyway, so I’ve just prejudiced right? I think I’d rather try and put them out of business life too short for me to be involved in a company to try and sell some to a broker. Yeah.
317 00:58:28.980 ⇒ 00:58:31.950 Uttam Kumaran: So another way is to
318 00:58:32.170 ⇒ 00:58:37.070 Uttam Kumaran: basically becoming worker by hiring one person with a license
319 00:58:37.260 ⇒ 00:58:59.020 Uttam Kumaran: in each state like a trust model, like what Bobby was doing way back in the day. He had a technical brokerage where he had a hired. He did have somebody. Yes, they had someone in every market, and then you could go to market legally, you know. Nobody can come and see you. And but that person has knowledge or
320 00:58:59.070 ⇒ 00:59:03.760 Uttam Kumaran: train the eyes. You know, they have other value, just a license
321 00:59:04.220 ⇒ 00:59:11.909 and I imagine they probably still interact with more clients and get involved. Some kind of process.
322 00:59:12.380 ⇒ 00:59:22.669 Uttam Kumaran: and a third way is just to buy an existing small brokerage, you know, just a small team like. So I don’t know if you have thoughts on the building market model. But that’s what we were asking about here.
323 00:59:23.200 ⇒ 00:59:37.679 Uttam Kumaran: Yeah, I mean, II agree. I partner with Bridge on this, where I was thinking a little bit more, was like, where is the knowledge source gonna come from? And this type of AI product.
324 00:59:37.780 ⇒ 01:00:04.139 Uttam Kumaran: You know how, like all of the data servers on Microsoft phones. But then you also have opportunities to input unique data. And right now, with all of the large brokerage firms are doing, is aggregating all the data they have and trying to build their own models based on that. So what I was thinking is like, who else is incentivized to create this model? That’s more direct tenant operator, tenant to owner, and it would be like a co-star like rather than
325 01:00:04.140 ⇒ 01:00:15.009 Uttam Kumaran: selling to a brokerage. So a co-star and say, Hey, we can give you this, or you know we can, partner on this, take all your data and
326 01:00:15.280 ⇒ 01:00:22.519 Uttam Kumaran: cause I think folks start to be problematic. But here’s another one materials bank. So materials bank is this big
327 01:00:22.590 ⇒ 01:00:33.159 website, basically one of those genius ideas that make a trillion dollars with the simplest idea. If you sell on the building material for office construction, you list your product
328 01:00:33.930 ⇒ 01:00:44.390 Uttam Kumaran: on their site. And everybody comes to buy materials on this website turns out before you would have to call a dealer. They would send you little samples with swatches, or this thing called Google like.
329 01:00:44.620 ⇒ 01:00:54.549 Uttam Kumaran: and you’d have to call a designer. And they’d say, Send me this kind of. And now you just go to material with your bank. It’s always categorical reason you’re looking at.
330 01:00:54.700 ⇒ 01:01:07.229 Uttam Kumaran: and then everybody has their offer right there, and you connect the cell room. I think you can order through now. So it’s just. It’s a but massive marketplace for most people by their by their stuff.
331 01:01:07.920 ⇒ 01:01:10.290 Uttam Kumaran: I’d say most people, because
332 01:01:10.320 ⇒ 01:01:17.470 Uttam Kumaran: hire people hire designer designers have what are called trade credits. So they get to buy the stuff with discount. So that that would be
333 01:01:17.680 ⇒ 01:01:22.010 Uttam Kumaran: that’d be the exception, I think, wouldn’t that? Yeah. So it could do a materials bank
334 01:01:22.890 ⇒ 01:01:28.750 Uttam Kumaran: cause cost cost for the materials, I think, is a key input, back to your point.
335 01:01:28.870 ⇒ 01:01:39.590 Uttam Kumaran: Yeah, that’s like, so you could just do a big. So I think there are ways to scrape or get, or
336 01:01:40.680 ⇒ 01:01:48.400 Uttam Kumaran: you by partnering or scraping. So you have a database of all those. So it’s cost that you could use it.
337 01:01:48.680 ⇒ 01:01:54.449 Uttam Kumaran: I think the problem with materials think is that there’s select materials. They’re not having tire.
338 01:01:54.760 ⇒ 01:02:00.130 Uttam Kumaran: They’re select materials of what you would need to actually deliver. Yeah.
339 01:02:01.820 ⇒ 01:02:07.920 Uttam Kumaran: yeah, the problem is what you want is jail. Jll’s database. That’s on our good right, of course.
340 01:02:08.670 ⇒ 01:02:22.039 Uttam Kumaran: cause they’re gonna wanna try to do this. I saw speed this morning. Oh, really, he lives move full time, like I have up to the lake no way. Yeah.
341 01:02:22.420 ⇒ 01:02:27.950 Uttam Kumaran: yeah. I did see him now twice a week. No way. He’s like
342 01:02:28.030 ⇒ 01:02:29.330 Uttam Kumaran: this small world
343 01:02:29.450 ⇒ 01:02:31.349 no longer jail
344 01:02:31.640 ⇒ 01:02:59.720 Uttam Kumaran: automated technology.
345 01:03:00.190 ⇒ 01:03:16.440 Uttam Kumaran: So that’s so, that’s one theory that I think we should be more into right. Which what other ones? Let’s spend a few minutes. So again. I want to pick your brains to hear. That’s talking about the 10 experience right right from your perspective.
346 01:03:16.900 ⇒ 01:03:24.159 Uttam Kumaran: There’s a a bunch of we maybe should be considering right from a landlord’s perspective. Right? What? What kind of things bring to mind?
347 01:03:24.190 ⇒ 01:03:47.450 Uttam Kumaran: Yeah. I mean, I think again, going through my existing process with the brokers that we’ve hired. I’m basically they know my rent role. They know when I have big leases expiring. They know who all my big tenants are. I’ve communicated what’s important to me. I want credit tenants to sign. I don’t care as much, probably to 10 year leases that don’t overlap with my current role. And I want
348 01:03:47.450 ⇒ 01:03:55.259 Uttam Kumaran: minimal Ti expenditures like, I want to spend what we need to spend to make that space is helpful. But we’re not playing in class doublea plus space where class
349 01:03:55.420 ⇒ 01:04:20.419 Uttam Kumaran: B minus flex building in East Austin. So we’re not going after. You know, we’re going after, like, the more yeah. So it’s just it’s just again, a different approach. But they know what’s important to me. I’m getting to this because they know what’s important to me. These are inputs is that ostensibly but what I’ve communicated to the brokers. Stream.
350 01:04:20.460 ⇒ 01:04:28.359 Uttam Kumaran: so we have a great leap. They’re fine. But they, you know again, the issues that we talked about where
351 01:04:28.450 ⇒ 01:05:02.430 Uttam Kumaran: these oh, sorry you don’t have the slide up anymore. But those 2 parties, when we showed the the like ecosystem slide. So those 2 parties in the middle are solely driven and incentivized by this 6% commission that’s coming out of every transaction. They could not give a shit. If the tenant that they put in my building blows out and dks after a year like these guys are, they get paid upfront so they can put a piece of shit which this this stream guys just did. They put me on the phone with the Cfo was like, Here, just hear a story. I’m like.
352 01:05:02.430 ⇒ 01:05:13.890 Uttam Kumaran: you guys are not. I told you 3 times to this tenant like, and then keep bringing it back to me. There is $67,000 on cash on hand. They are burning, you know, 10 million dollars a year.
353 01:05:13.910 ⇒ 01:05:29.680 Uttam Kumaran: abysmal financial, and they want, you know, $50 in Ti from us. It, which would have been, you know, for, like a 20,000 foot, it would have been hundreds of thousands of dollars that they’re asking us basically to just risk on their credit. So this is why credit so important. So?
354 01:05:29.790 ⇒ 01:05:51.329 Uttam Kumaran: And I’ve come to learn that that’s about as important as anything else, because you’re risking commissions like your your commissions on that expense, on that lease. A 10 year lease with, you know, 1617 bucks a foot are massive, and then the tis are insane. So you’re spending like hundreds of thousands of dollars upfront betting on this company with 67,000 bucks in cash on hand
355 01:05:51.330 ⇒ 01:06:10.999 Uttam Kumaran: that they’re not gonna be K just bad bet. And so for me, if I was if and I’m programming my brokers that way like, stop bringing these shitty credit tenants bring the quality credit tenants that I don’t need the most free. Just fill my bill. Just to add to that picture right? The landlord got a broker
356 01:06:11.120 ⇒ 01:06:17.889 Uttam Kumaran: to use traditional, you know, terminology gentry, or the broker don’t do top of funnel.
357 01:06:18.570 ⇒ 01:06:40.989 Uttam Kumaran: So if they don’t run marketing campaigns for the most part something like that. All they’re doing is putting a listing in Costar. It’s always struck me as an opportunity. You could be targeted Facebook ads and just skip the fucking, you know. Co-star thing altogether.
358 01:06:41.340 ⇒ 01:06:52.620 Uttam Kumaran: Really, there’s a there’s a digital ad company that we don’t really ask that, that’s all they do. And
359 01:06:52.620 ⇒ 01:07:16.919 Uttam Kumaran: yeah, yeah, and they’re breaking cash. So pre-defined. And it’s pretty. Nothing but what we just described is, I guess you know, from what you call it midfallen.
360 01:07:16.920 ⇒ 01:07:19.490 Yeah, which is called my customer.
361 01:07:19.530 ⇒ 01:07:26.019 Uttam Kumaran: and shaping the deal right? So many deals are business with this.
362 01:07:26.110 ⇒ 01:07:40.329 Uttam Kumaran: Only you know this kind of credit rating like that some mid funnel kind of activity. And so he’s giving criteria to a broker, and ideally, what the broker would do if he did anything was go off and develop top of funnel
363 01:07:40.360 ⇒ 01:07:59.040 Uttam Kumaran: opportunities to fit. That can be any phase of that. Okay, so they’re not like we need you to.
364 01:07:59.110 ⇒ 01:08:12.089 Uttam Kumaran: You need to get this set of requirements done before you’re qualified. It’s all confusing, right? Cause, like, you know, you could get 10. That’s kind of interesting and kind of meets his criteria. But they’re like, well, I wanna see space plan like on what to do like.
365 01:08:12.270 ⇒ 01:08:38.190 Uttam Kumaran: That’s why the sales process takes so long. And to be fair. We did spend $1,100 to get a test fit. Oh, look at you, yeah, we did with the art. We had. Our architects meet with this tenant that I had 0 confidence in asking their financial. And it was like, Let’s just do the test fit. They could, you know, we’ll use it in our working buyers. This is justification. We’ll use it. Our working flyers as an alternate if it they blow out which they did. 20 cents is square. Yeah.
366 01:08:39.274 ⇒ 01:08:56.089 Uttam Kumaran: It was $1,100. I that would be like 15 cents. Yeah, it was like 12 cents. But yeah, yeah, anyways, so we spent the money. So
367 01:08:56.189 ⇒ 01:09:23.860 Uttam Kumaran: okay, so that’s a good dissertation like this, are you suggesting? Just like, Hey, I do all that, or like, I’m sick of brokers. Can AI do? That is that kind of where you land on that? Yeah, I think I think me being able to program what I’m looking for in my tenants and then having a an Ecos like a matchmaking ecosystem of like these are the landlords. With these types of spaces I’ve like updated, uploaded all my spaces and profile them. This is in detail. I’m willing to spend this much money just getting my terms out there
368 01:09:23.899 ⇒ 01:09:47.949 Uttam Kumaran: for the right tenant to then be potentially if someone on the 10 Side is coming in programming their requirements. Having AI be able to match make of willingly. Lord, who’s looking for a tenant like me, and then a tenant who’s got this specific requirements and then letting AI kind of bridge the gap like, Hey, these are a mutable pair.
369 01:09:48.000 ⇒ 01:09:57.569 Uttam Kumaran: I’m gonna match, make these people, and then leverage AI to kind of break. But even if the if the materials that are presented to you by the tenant rep are good enough.
370 01:09:57.630 ⇒ 01:10:21.020 Uttam Kumaran: like, I think there’s something there in in getting them to a like using AI to get them to a spot where they’re not just so early in the process, like they have all a lot of stuff detailed and everything. And then you can actually say, this is a qualified lead right, and it seems like for the most part qualified leads. I’m saying that if a lot of tenant reps are coming in at any various stages, if, as the tenant rep.
371 01:10:21.650 ⇒ 01:10:32.139 Uttam Kumaran: you know, we or somebody comes to any of the landlords, here’s a package with everything laid out, and at least they’re somewhat qualified, much more qualified on average than anybody else.
372 01:10:32.150 ⇒ 01:10:38.699 Uttam Kumaran: There’s probably some opportunity there. Yeah, I think that the problem
373 01:10:39.590 ⇒ 01:10:42.140 Uttam Kumaran: you’re you’re trying to solve for is like
374 01:10:42.510 ⇒ 01:10:47.390 Uttam Kumaran: you want to get to that qualified lead without these brokers in the middle?
375 01:10:47.410 ⇒ 01:11:12.670 Uttam Kumaran: And if that were possible, right? Yeah, the problem is that tenants themselves don’t know how to develop their requirements and articulate those in a way that they can negotiate with a landlord. So so if AI were to help them articulate, you know their terms, what they need, etc.,
376 01:11:12.690 ⇒ 01:11:22.180 Uttam Kumaran: and develop that. And then, you know, is technology. So let’s go back 4 min ago. So we hypothesize a
377 01:11:22.560 ⇒ 01:11:35.429 Uttam Kumaran: Ai powered tenant consulted it, whose job it was was to iterally using conversational techniques, iterative techniques, knowledge of materials and space and stuff like that
378 01:11:35.480 ⇒ 01:11:37.970 Uttam Kumaran: to develop
379 01:11:38.280 ⇒ 01:11:48.949 Uttam Kumaran: the expect. Set the expectations and develop requirements from a tech. That’s the functionality we described. And then we hypothesize to go to market where we just replace.
380 01:11:49.240 ⇒ 01:11:59.380 Uttam Kumaran: or the world system? Isn’t it true that that same functionality you could? You should just offer yourself. Yes, like, why would we get like
381 01:11:59.990 ⇒ 01:12:06.069 Uttam Kumaran: like you’re like, Hey, there’s this tool. It’s free, and I have to pay for it unless a deal comes through it.
382 01:12:06.220 ⇒ 01:12:25.110 Uttam Kumaran: I could sign up for broker. But now to lease agreement, has it? Exclusive? Right? That’s the problem. Well, you sign a lease agreement with screen. It has a exclusivity clause that you cannot. You cannot hire anybody else or lease a space
383 01:12:25.160 ⇒ 01:12:27.720 Uttam Kumaran: if Elderly says you can’t lease correctly.
384 01:12:28.860 ⇒ 01:12:40.110 Uttam Kumaran: Yeah. So the listing agreement they’re all negotiable. But the way it reads is.
385 01:12:40.400 ⇒ 01:12:56.709 Uttam Kumaran: if I source a deal around my broker, I can just have one
386 01:12:56.730 ⇒ 01:13:17.859 Uttam Kumaran: broker.
387 01:13:18.120 ⇒ 01:13:27.340 Uttam Kumaran: You’ve you’ve got the same capability. Which is this high value. Add conversational capability for again
388 01:13:27.510 ⇒ 01:13:30.429 Uttam Kumaran: interviewing requirements and setting expectations.
389 01:13:31.500 ⇒ 01:13:39.770 Uttam Kumaran: slapping on your building and just saying anybody can use it right? Right? Like, I’m gonna get better 10 like the people who use it and like
390 01:13:39.790 ⇒ 01:13:42.330 Uttam Kumaran: can see the space and figure out what the costs are.
391 01:13:42.710 ⇒ 01:14:08.439 Uttam Kumaran: I’m gonna get super qualified leads right from that thing right? Like way more than a broker people just like, yeah, is that kind of what you were saying? Yeah. And and also on the tenant side. They may see a package that you don’t. You don’t really care about. Your package is like the financial model like that is your CAD file right? That’s what gets outputted on your end. Based their their package that gets marketed.
392 01:14:08.440 ⇒ 01:14:14.479 Uttam Kumaran: It’s feasible to do in a much different way than what they might see you. Yes.
393 01:14:14.520 ⇒ 01:14:24.419 Uttam Kumaran: there’s this whole, all these architectural and related data that Brick was talking about. Those are the 2 inputs. The user experience is just
394 01:14:24.470 ⇒ 01:14:26.480 Uttam Kumaran: a conversational. Yeah.
395 01:14:27.690 ⇒ 01:14:41.870 Uttam Kumaran: think about, what do I want? What kind of space do I want? How much do I wanna pay for it? And what’s it look like? And I think it’s visual, and it’s kind of confrontational I was like. So if you, if you are landlord, then
396 01:14:41.890 ⇒ 01:15:06.869 Uttam Kumaran: you don’t have to directly use it as your
397 01:15:06.870 ⇒ 01:15:20.389 Uttam Kumaran: beat it up, but they still making money for, but at the same time I might pay a marginal marketing expense. Not enough. It’s not enough to your point. It’s not 80 bucks.
398 01:15:20.460 ⇒ 01:15:45.510 Uttam Kumaran: for, like the problem, I guess.
399 01:15:45.700 ⇒ 01:15:50.789 Uttam Kumaran: Now the answer could be fine. Buy your screen like how hard it is that you gotta close our license like
400 01:15:51.590 ⇒ 01:16:12.150 Uttam Kumaran: like, why wouldn’t you just have fire screen and have this thing to it? Cause I’ve I’ve got 15 other buildings that I have to worry about. And, like, you know, I’ve got a bunch of different again. I personally have less than that. But I’m thinking about an asset manager at Blackstone. They’ve got 15 other buildings that they have to worry about. They’re not gonna be spending, you know, a disproportionate amount of time
401 01:16:12.250 ⇒ 01:16:22.910 Uttam Kumaran: on this one. Come along. And I’m going. Okay. I’m just like, yeah.
402 01:16:23.170 ⇒ 01:16:29.090 Uttam Kumaran: And you’re leasing your leasing age of contracts up. These things are like one to 2 years long. Hire me
403 01:16:30.370 ⇒ 01:16:57.389 Uttam Kumaran: my again. It’s reputation. Oh, yeah, it’s my equity, my equity in the deal, my limited partner, whether, if I’m if I’m big institution and my equity partner is Blackstein or someone else, and I go report to them like cause I do my quarterly Lp reports whether I have 50 lps or one every quarter. I’m reporting on asset activity. And if I go to them and say, Hey, I hired a piece of software to lease the asset that you’ve invested 50 million dollars. How about that hire that AI
404 01:16:57.390 ⇒ 01:17:06.600 powered? No, you just hired a broker that works faster. Why does that have to matter if it’s a right
405 01:17:06.660 ⇒ 01:17:13.089 Uttam Kumaran: forget technology. You just you hired somebody that they hadn’t heard of before. What happens?
406 01:17:13.330 ⇒ 01:17:38.990 Uttam Kumaran: Oh, they would ask, well, who is it, you know? Like, why did you hire this guy? Lp’s are immediately gonna ask, why would you hire this I just hired? Oh, it’s it’s it’s some smart guy. What’s plus AI! They go. What right? They wouldn’t like that.
407 01:17:38.990 ⇒ 01:18:03.379 Uttam Kumaran: No, so then, but it almost goes back to your third. Got a market thing right? It’s like there is some reputational capital you could buy. But yeah, for like screens, for you could buy a real small thing like schedules. Outfit is for people you could probably buy for a million bucks. Yeah, but streams with a little bit. Yeah, yeah, 25 brokers. I don’t think you have to buy a brokers honestly, with how terrible offs work it is. You can
408 01:18:03.380 ⇒ 01:18:19.370 Uttam Kumaran: easily just pick a few off. And you know, like, you know, they’re very available right now to buy the properties. I’m saying
409 01:18:19.370 ⇒ 01:18:43.949 Uttam Kumaran: I’m sorry. I think we’re talking about. I’m saying you’re talking about buying Chad Chad’s operation. I’m saying, don’t buy Chad’s operation. Go hire the guy who hasn’t seen a paycheck for 2 years. No, no, I’m talking about. I’m talking about for your backing up for your new co-market strategy. Right? Do we sell it to brokers? Do we go buy brokers? Do we go
410 01:18:43.950 ⇒ 01:19:08.939 Uttam Kumaran: hired brokers? Right? I’m saying. My point on that was, don’t buy brokerage hire brokers in individual markets and branded as whatever new code or you could say, it’s like Chad Brad, whatever whatever.
411 01:19:08.940 ⇒ 01:19:17.390 Uttam Kumaran: Start this new AI, by the way, that is insanely well known gentry new every month.
412 01:19:17.600 ⇒ 01:19:34.630 Uttam Kumaran: Who the top brokers like? It’s yeah wildly like he would know down to the here the top 30 brokers every quarter, so you could just go higher. What’s the what’s the leverage on like? Do I have to have one for city, county, State.
413 01:19:34.920 ⇒ 01:19:46.750 Uttam Kumaran: Texas broker in Austin, who supports Dallas Houston. The only question is, do you need local market knowledge? Yeah.
414 01:19:47.180 ⇒ 01:19:52.299 Uttam Kumaran: Did this kind of tasking knowledge that they carry in their head because they drink at the same bar. As you know.
415 01:19:53.200 ⇒ 01:20:12.699 Uttam Kumaran: I mean, the other thing is the physical component of touring right? Like you get back to the touring thing, and if you’ve got one person in Austin, he’s got 2 rescheduled in Dallas Houston, San Antonio.
416 01:20:12.900 ⇒ 01:20:35.040 Uttam Kumaran: You want those tours to close right? So there’s like there’s still qualification. The close ratio on Tours is about no man. It’s very different now. The sales ratios are not good, yeah, like now it’s bad back. Then it was it was, I don’t know. Yeah, 20 to 30. Now, it’s much less because people are just window shopping and
417 01:20:35.080 ⇒ 01:20:42.700 Uttam Kumaran: just a funnel. So that doesn’t matter right? As long as the close rate is higher than really proven it. Right?
418 01:20:43.070 ⇒ 01:21:00.379 Uttam Kumaran: Yeah, I mean again, it’s just volume feet in like my space like when get 10 inside my space touring, I’m happy, I mean as a as a landlord. Is there any correlation to this front end process that you ideated
419 01:21:00.460 ⇒ 01:21:04.199 Uttam Kumaran: to the close? Right? When they show? Yeah, that is a great question.
420 01:21:04.280 ⇒ 01:21:26.500 Uttam Kumaran: Yeah, I mean, so much qualified on the condition of the Space Cause. So many times people show up to my space. And they’ve seen the floor plan online, and they walk into like, oh, this is a piece of shit, and I’m like, cause I don’t show the the. I can’t show the ceiling tiles on my flyer right like I can’t show that there’s like water staying ceiling tiles, and I can’t show that it’s in rough shading. So they show up. And they’re like, Oh, this is terrible!
421 01:21:26.500 ⇒ 01:21:39.170 Uttam Kumaran: I don’t know. So when we you relate to this. But when my wife, you know real well, is just a fantastic remodel like that’s for core conference, these remodeling houses, and she’ll walk into these houses you only go.
422 01:21:39.280 ⇒ 01:22:00.169 Uttam Kumaran: and a year later people walk into the house, and she doesn’t spend that by the way she’s
423 01:22:00.690 ⇒ 01:22:06.649 Uttam Kumaran: and so and well, I think we all know people like that that can visualize these spaces.
424 01:22:06.960 ⇒ 01:22:09.900 Uttam Kumaran: and a lot of times in the leasing process.
425 01:22:10.010 ⇒ 01:22:34.400 Uttam Kumaran: Most people are not, cannot visualize shit they walk in is your bare walls. They see wires hanging down. Your Vp. Of operations is like, where am I going to put my desk? And it’s like, Well, no, there’s a whole negotiation don’t get done because of that. So, and we were intensified that dislocation where they can walk in when we work in these space. Now imagine experience where you show them
426 01:22:34.400 ⇒ 01:22:42.299 space after interviewing. And you know, doing this whole thing, and they can literally see and maybe even go in, you know, immersively on.
427 01:22:42.300 ⇒ 01:22:51.469 Uttam Kumaran: See it? I can’t wait to work there. Your question, the conversion rate would be much, much, much higher.
428 01:22:51.600 ⇒ 01:22:53.190 Uttam Kumaran: Yeah.
429 01:22:53.360 ⇒ 01:23:07.130 Uttam Kumaran: we saw that it’s okay.
430 01:23:07.800 ⇒ 01:23:24.970 Uttam Kumaran: But it’s also it’s also even on another size, like you’re filtering out some people who may have made it to that step. Not only are you helping people that like move faster, you’re actually taking out a lot of noise the same time, because a lot of times you’ll spend 2, 3 months.
431 01:23:25.260 ⇒ 01:23:32.760 Uttam Kumaran: just demystifying what I can get for this budget easily, and the whole the whole process is on hold.
432 01:23:32.800 ⇒ 01:23:42.629 Uttam Kumaran: So you got a landlord not without a deal signed. you know, the tenants getting more and more nurse, because their their lease is almost up, so they’re they may have to start going month a month.
433 01:23:42.840 ⇒ 01:23:46.410 Uttam Kumaran: So what happens is they have to go back to their land already. Kind of 3 more months.
434 01:23:46.440 ⇒ 01:23:51.079 Uttam Kumaran: Sure you can. So there’s just a bunch of
435 01:23:51.480 ⇒ 01:24:13.179 Uttam Kumaran: problem when these deals delay. Yeah. But I also think about even in like the business I’m operating is like using AI to even automate all the internal ops as well. All the communication, like all that stuff, I think, is totally still on the table, and one of the benefits of owning the brokerage is because it’s not just a software component in this. It’s like
436 01:24:13.190 ⇒ 01:24:20.839 Uttam Kumaran: the whole thing the way you communicate with the client, whatever happens needs to be enhanced. So it’s like
437 01:24:20.980 ⇒ 01:24:45.880 Uttam Kumaran: all those people being engaged pre lease
438 01:24:45.970 ⇒ 01:24:53.129 Uttam Kumaran: and someone’s paying them. And you know, all of that communication and approvals
439 01:24:53.740 ⇒ 01:24:56.479 Uttam Kumaran: has a lot of communication back and forth. Basically.
440 01:24:56.520 ⇒ 01:25:07.329 Uttam Kumaran: I mean the landlord’s paying pretty much everyone, I mean. In some cases the the big enterprise tenants are hiring different architecture firm and start spending speculative money
441 01:25:07.420 ⇒ 01:25:19.160 Uttam Kumaran: as they’re trying to figure out their space. But I mean, more often than not, we’re paying, especially in this market environment. We’re paying for test fits for prospective tenants, saying like, Here’s your.
442 01:25:19.290 ⇒ 01:25:41.120 Uttam Kumaran: here’s what we’re willing to do. But that’s not like Cac. That’s like something that’s not marketing. We do treat it as leasing costs somewhere between qualified. But I spent that money knowing that they were shipped. Credit
443 01:25:41.380 ⇒ 01:26:01.039 Uttam Kumaran: for me. Everything is funnel. That’s all I that’s all I do for everybody and I that’s why it’s like really helpful to see that. But when we think about fun I’ll think about not just the numbers coming through it, but all the different. Yeah. So one of them is, how long do I spend in this stage? What’s my. And then what’s the cost? Yeah.
444 01:26:01.070 ⇒ 01:26:02.459 Uttam Kumaran: 1, 6, 5.
445 01:26:02.880 ⇒ 01:26:05.380 Uttam Kumaran: Okay. What other
446 01:26:06.870 ⇒ 01:26:13.989 Uttam Kumaran: angles here? Should we be batting around for? Further? Because this is helping what I’m trying to do is identify how to dive a little deeper. We’ll do that.
447 01:26:14.460 ⇒ 01:26:21.990 Uttam Kumaran: And one thing we haven’t talked about is just in negotiation aspect. And
448 01:26:22.630 ⇒ 01:26:28.100 Uttam Kumaran: can there be on one side or the other a way to
449 01:26:28.620 ⇒ 01:26:39.390 Uttam Kumaran: source data prompts that inform the strategy of either. You know the landlord or the tenant on how they should be negotiating their terms.
450 01:26:39.670 ⇒ 01:27:02.870 Uttam Kumaran: For sure. I mean, I said, this earlier talking about market knowledge like that is the reason why brokers are so important to someone like me is like, I don’t have time to study the South East sub market of for industrial Flex class E, minus space, like. I don’t know what other spaces are commanding.
451 01:27:02.870 ⇒ 01:27:11.350 Uttam Kumaran: and keeping my finger on that pulse would, with how quickly things change would be a full time drop. So that’s why there’s value in
452 01:27:11.350 ⇒ 01:27:27.679 Uttam Kumaran: having them. How much of that value could be like, how much of that could be derived from using AI like if I was able to know if I had, like an AI broker who could tell me like, Hey, market rate is this, you know, in multi family we use
453 01:27:27.870 ⇒ 01:27:43.030 Uttam Kumaran: big data to price all of our properties. So like our pricing is all generated by these big data models. So like, it’s looking at everything else around us, and pricing each individual unit every month at in real time. So
454 01:27:43.030 ⇒ 01:28:07.749 Uttam Kumaran: commercial real estate does not, I mean, office does not do that. This is a multi family specific pricing algorithm that that spits out every month like there. We’re buying this property in Houston right now that I’m trying to rip lock with fan made today. And and we’re buying it for 30% discount, because the landlord was manually setting all of his rents for each of his units. He was like, Oh, my one beds, I’m gonna put it.
455 01:28:07.750 ⇒ 01:28:20.070 Uttam Kumaran: you know, 1,400 this month, and in a model that everyone else uses has all, everyone else’s one beds at 1,500. And so he’s losing all this revenue that makes his value property worth less.
456 01:28:20.190 ⇒ 01:28:29.799 Uttam Kumaran: So we’re able to buy it at a discount and just turn that machine on start marking this right? So what I’m saying is, there’s an algorithm for pricing multi-family
457 01:28:29.870 ⇒ 01:28:42.389 Uttam Kumaran: that doesn’t exist for office. So there’s no, there’s no like automated office pricing engine. It’s just like the market is what the market is. And I just look at Comps around me and see what other people are getting. So just.
458 01:28:42.960 ⇒ 01:28:49.149 Uttam Kumaran: I’m gonna ask you a question with a question. I think the answer is, this is a dead end. But okay.
459 01:28:49.820 ⇒ 01:29:03.259 Uttam Kumaran: so the the market right now is a seller side. So the way it starts is a land or an so the whole process is
460 01:29:03.430 ⇒ 01:29:04.990 Uttam Kumaran: initiated by.
461 01:29:05.110 ⇒ 01:29:14.349 Uttam Kumaran: That’s entry. And then the database that fills up. And it’s it’s just like, and then teller, start search.
462 01:29:15.330 ⇒ 01:29:20.829 Uttam Kumaran: Is there a way to turn that around, so that when tenants express interest.
463 01:29:22.090 ⇒ 01:29:25.849 Uttam Kumaran: that indication of interest is somehow broadcast.
464 01:29:26.030 ⇒ 01:29:30.610 Uttam Kumaran: anybody with a building they may or may not have a listed.
465 01:29:34.320 ⇒ 01:29:38.450 Uttam Kumaran: There’s a tenant out there in market. That’s that’s like looking for X.
466 01:29:38.520 ⇒ 01:29:48.730 Uttam Kumaran: It’s, you know, quality. I should. I should go to mine as well and put these weeks together like I should send back. So there’s a process that
467 01:29:49.110 ⇒ 01:29:56.999 Uttam Kumaran: to the funnel. What happens is at the top of the funnel. You get people doing listings and surveys. The mid funnel is called Rfp
468 01:29:57.230 ⇒ 01:30:00.560 Uttam Kumaran: proposal. This is the back. Yeah.
469 01:30:00.570 ⇒ 01:30:04.909 Uttam Kumaran: So is there a way to start here and have the seller?
470 01:30:05.300 ⇒ 01:30:11.080 Uttam Kumaran: Yes. or the the buyers just in the mantras. and somehow
471 01:30:11.150 ⇒ 01:30:15.430 Uttam Kumaran: magically just paying every asset on Arthur broker going
472 01:30:16.040 ⇒ 01:30:38.690 Uttam Kumaran: proposals.
473 01:30:38.840 ⇒ 01:30:42.730 Uttam Kumaran: so that exercise of
474 01:30:42.970 ⇒ 01:30:46.979 Uttam Kumaran: aggregating active tenants in the market
475 01:30:47.030 ⇒ 01:30:59.540 Uttam Kumaran: insight.
476 01:30:59.790 ⇒ 01:31:20.149 Uttam Kumaran: That’s really interesting. So so so if I’m one of these, sorry, I’m one of these, you know, potential tenants. Yeah, I’m I’m a little guy. Maybe I want 5 or 10,000 square feet. I don’t know Jack about Cr, I think I need some space.
477 01:31:20.300 ⇒ 01:31:25.149 Uttam Kumaran: So so we have authorized this AI broker.
478 01:31:25.990 ⇒ 01:31:37.489 Uttam Kumaran: So but sorry today, what do I do today? Dick found you when you were motive?
479 01:31:37.490 ⇒ 01:31:56.969 Uttam Kumaran: Right, Eric.
480 01:31:56.970 ⇒ 01:32:07.959 Uttam Kumaran: but a lot of people will go online and search for brokers, or they’ll search for those things right? So there’s a fair amount, especially in the market.
481 01:32:07.970 ⇒ 01:32:20.009 Uttam Kumaran: You know, they’ll go to the Internet first. So we just hypothesize it, broker. But the hypothesis here was this broker is doing what Tener brokers do today.
482 01:32:20.330 ⇒ 01:32:37.190 Uttam Kumaran: which is, go to Cosar. Let me go look at the existing inventory. Take that inventory. put a space planning kind of thing in front of it, and show you this prompted to search for right. But
483 01:32:37.220 ⇒ 01:32:42.219 Uttam Kumaran: is there a way just to skip? I mean, you may want to do this, but also do this
484 01:32:42.610 ⇒ 01:33:08.390 Uttam Kumaran: and just send direct same sales process this way.
485 01:33:08.540 ⇒ 01:33:15.730 Uttam Kumaran: Yeah. And they they do that over time. If this works in theory, you can get, you can get this goes away like a scale like
486 01:33:15.840 ⇒ 01:33:31.840 Uttam Kumaran: tenants. Yes. I could just I mean, brokers are still the ones blasting it right? So like I. Every day I get 10 requirements from Aquila. Commercial. It says, like, Hey, we’ve got a 10 requirement. We need 10,000 feet and send Cbe for 3 to 5 years at this rate.
487 01:33:31.860 ⇒ 01:33:38.990 Uttam Kumaran: you know, timing is September, right? So they send these blasts out today to everyone on their list.
488 01:33:39.040 ⇒ 01:34:04.949 Uttam Kumaran: It’s still running through a brokerage. It’s mostly targeting other brokers like there. I’m getting it as a landlord, because when I started here they just all added me to their list like the big house list, so I just get. But I don’t look at those emails. But you could. You could pop that up right? So basically, what we’re saying is, it’s happening between brokers. What I’m saying is, if you do it early enough.
489 01:34:05.410 ⇒ 01:34:15.880 Uttam Kumaran: you get to gentry that describes in great detail not just, you know, blah blah blah like actually a whole bunch of detail on like finish and everything else, or like
490 01:34:15.880 ⇒ 01:34:37.640 Uttam Kumaran: we take, you know, January.
491 01:34:37.900 ⇒ 01:34:43.780 Uttam Kumaran: And you could have a deal. And maybe you’re like, okay, I’m gonna respond.
492 01:34:44.230 ⇒ 01:34:47.840 Uttam Kumaran: Maybe that some wasn’t something I was just would have listed otherwise.
493 01:34:48.240 ⇒ 01:35:16.190 Uttam Kumaran: So yeah, that was just a thought exercise on how you could well cause. Often when I’m marketing space. I I’m marking all these chopped up vacancies, but you know, maybe I’ve got I’ve got at Uvc. I put an 8,000 foot suite that I know. I can put a demising wall and make a 5 or 3 right like very easily. But people aren’t picking that up. They just see an 8,000 foot vacancy. If I got this I could be like well, I could spend a little money to chop this up through another kitchen at
494 01:35:16.390 ⇒ 01:35:26.739 Uttam Kumaran: and be able to accommodate this 5,000 foot requirement. But they’re not gonna come to me because they see an 8,000 foot suite. So they’re anyways, it’s like a way for me to. The question is.
495 01:35:26.860 ⇒ 01:35:37.490 Uttam Kumaran: once people are in market, tenants are in market right there within. That’s just like 12 months within 12 months of their lease. Yeah, which is a
496 01:35:37.490 ⇒ 01:36:01.929 Uttam Kumaran: you do have the option usually on month to month. It’s called Holdover, and it’s bad vibes for the relationship, because Honeywell just has taken forever negotiate their lease, and we’re now charging them 150. So you have all these things, these deals that are sort of not aligned well in time.
497 01:36:03.190 ⇒ 01:36:04.550 Uttam Kumaran: And so
498 01:36:05.680 ⇒ 01:36:07.250 Uttam Kumaran: I guess I’m thinking.
499 01:36:09.660 ⇒ 01:36:12.560 Uttam Kumaran: And most Cfos, I don’t think would be this savvy. But
500 01:36:14.450 ⇒ 01:36:18.599 Uttam Kumaran: what if you’re a Cfo, and you know you need. You need space in 18 months.
501 01:36:18.840 ⇒ 01:36:21.649 Uttam Kumaran: and you start to express that interest early.
502 01:36:22.810 ⇒ 01:36:26.219 Uttam Kumaran: because you know you could always move out of your space or like there’s
503 01:36:26.690 ⇒ 01:36:46.259 Uttam Kumaran: is there? I’m just trying to explore ways to change the way things are transacted, and almost the timing of it. So let me tell you what you guys have now, open door works. So all these resid models that came out that I buy, you know the ivy thing, which is, I’ll I’ll buy, and all the inventory, and then I’ll change it, and there’s a flow.
504 01:36:46.470 ⇒ 01:36:58.060 Uttam Kumaran: and so then I’ll have it, and I can do the transactions real quickly, and I can buy these things at discount because I get distressed hours and so forth. so that I’m just kind of going down that thought exercise going
505 01:36:58.860 ⇒ 01:37:05.479 Uttam Kumaran: with a much better experience and the ability to have AI look at so many more possibilities. Is there a way
506 01:37:05.960 ⇒ 01:37:12.860 Uttam Kumaran: to offer a different go to market for buyers and sellers versus. I’m just like your tennis broker. I’m just
507 01:37:13.600 ⇒ 01:37:20.900 Uttam Kumaran: yeah. Maybe that’s good enough. Right? Maybe it’s good enough, but I’m just wondering.
508 01:37:22.260 ⇒ 01:37:23.580 Uttam Kumaran: you know.
509 01:37:24.270 ⇒ 01:37:30.329 Uttam Kumaran: if if if it could do all these things essentially, not quite for you, but for marginally low cost.
510 01:37:31.350 ⇒ 01:37:34.379 Uttam Kumaran: how could you change the way people buy and sell office space?
511 01:37:36.130 ⇒ 01:37:39.110 Uttam Kumaran: Would that be information be anywhere other than Costar right now
512 01:37:39.740 ⇒ 01:38:05.400 Uttam Kumaran: for that specific for what he mentioned, like the 8,000 square feet additional service. So he’s got literally shows
513 01:38:05.480 ⇒ 01:38:08.840 Uttam Kumaran: in great detail every square foot rent roll
514 01:38:08.850 ⇒ 01:38:29.209 Uttam Kumaran: when it’s due. How much Capex is on it like that is proprietary. You would never show that. Well, he shows it to your lenders. Right? Well, yeah. My debt service coverage ratio can’t go below. Obviously one. Usually they want more than. But if they see if he was your customer, yeah, import that. And that information is not anywhere.
515 01:38:29.230 ⇒ 01:38:33.019 Uttam Kumaran: Yeah, so you could. You couldn’t train the AI and say.
516 01:38:33.040 ⇒ 01:38:35.749 Uttam Kumaran: There you go. You have everything in Gentry’s.
517 01:38:36.600 ⇒ 01:38:43.679 Uttam Kumaran: you know. All the information about what you want won’t do, you could give it to an AI.
518 01:38:46.160 ⇒ 01:38:49.260 Uttam Kumaran: Yeah, that’s that’s kind of what I was saying was training
519 01:38:49.360 ⇒ 01:39:12.599 Uttam Kumaran: training. They say I know what I am and not willing to do. And then putting that out in the world where interesting is all the demos we see in conversational after you guys do it all day long, too. It it. The conversational mode is really interesting.
520 01:39:12.600 ⇒ 01:39:20.890 Uttam Kumaran: like like you can imagine asking me, hey? Britney wants you know what which one’s a better deal this one or that 10, this one like
521 01:39:21.070 ⇒ 01:39:41.530 Uttam Kumaran: I do that for everything. I send it, everything I get. And I ask it for advice, like email conversation with clients, potential deals, contracts. I and I do it just cause I want to see what it does. And then maybe get 10% edge.
522 01:39:41.530 ⇒ 01:39:52.729 Uttam Kumaran: Maybe you don’t get anything reasonable. That’s it’s like it’s cost like what I don’t know 20 bucks a month to just get like scenarios. It’s great. Well beyond what you could do.
523 01:39:52.730 ⇒ 01:39:53.410 Yeah.
524 01:39:53.870 ⇒ 01:40:12.580 Uttam Kumaran: yeah, user at the time. I guess if you had into the time you could go if you could. If you could know if if you could have know my position and negotiate on my behalf to get to an Rfp. Or get to an and say, Hey! We went back and forth with this tenant and got you this.
525 01:40:12.670 ⇒ 01:40:17.410 Uttam Kumaran: you know. Now it’s ready for you to look at it. And it was able to do that online.
526 01:40:17.520 ⇒ 01:40:38.419 Uttam Kumaran: you know, just conversational with the tenant, or whoever. So my mind blow up because I was thinking on this path last weekend, and I thought about one of those on each side. So you’ve trained an AI with your proprietary knowledge, and he’s trained an AI with all the space planning like. Here’s everything I need all my primary, and then you let it pack at each other. Yeah.
527 01:40:48.890 ⇒ 01:41:01.379 Uttam Kumaran: do they ever agree like, do they like to infinite that spiral, or do they, or do they optimize? Depends depends if it knows it’s AI.
528 01:41:01.590 ⇒ 01:41:12.100 Uttam Kumaran: Well, II think, just depends on the constraints, because you do. You know the way you would do less. So your side. But your side is you’re gonna provide a set of
529 01:41:13.910 ⇒ 01:41:15.200 Uttam Kumaran: constraining model
530 01:41:15.230 ⇒ 01:41:19.210 Uttam Kumaran: right? Right? That. Say, here are the things I care about within these ranges.
531 01:41:19.510 ⇒ 01:41:26.429 Uttam Kumaran: and you know we might be surprised about what we get. But it’s roughly an optimized inside of that right
532 01:41:27.920 ⇒ 01:41:28.900 Uttam Kumaran: And so what
533 01:41:29.980 ⇒ 01:41:39.149 Uttam Kumaran: that can very well work. It’s just that quickly. It’s going to say of of these options, this one’s the best for you, depending on whether I’m
534 01:41:39.460 ⇒ 01:41:42.570 or micro optimizing Macro been your property.
535 01:41:42.770 ⇒ 01:41:53.199 Uttam Kumaran: I could be right. Yeah, I mean what we’ve described. And and it’s limit is a marketplace. Right?
536 01:41:54.110 ⇒ 01:41:56.100 Uttam Kumaran: The question is, how do you
537 01:41:56.380 ⇒ 01:41:59.099 Uttam Kumaran: in these zones? How do you kick? Start the marketplace?
538 01:41:59.870 ⇒ 01:42:03.440 Uttam Kumaran: What I like. you know, stealing from April is
539 01:42:03.530 ⇒ 01:42:07.829 what I like about this brokerage buying a broker. Sorry not a brokerage
540 01:42:07.900 ⇒ 01:42:13.170 Uttam Kumaran: is, I have an, I hope, intelligent, human. I can use to kickstart
541 01:42:13.200 ⇒ 01:42:15.249 process that has market knowledge.
542 01:42:15.370 ⇒ 01:42:16.969 Uttam Kumaran: So I like starting in town.
543 01:42:18.710 ⇒ 01:42:28.580 Uttam Kumaran: So by this person and say, Okay, your job is to, you know, divine all the cool stuff questions that you’ve learned over the years.
544 01:42:28.720 ⇒ 01:42:32.860 Uttam Kumaran: And that’s how I’m gonna train the the AI
545 01:42:33.220 ⇒ 01:42:35.740 understand what that tenant wants.
546 01:42:36.640 ⇒ 01:42:52.970 Uttam Kumaran: And now I can bootstrap your part right? Cause it’s the Austin Guy, and he goes the 18 or 29 people that I know January and Dick and 5 other people. I can even manually take them then. But then I build the other side, which is capture. What they want
547 01:42:53.520 ⇒ 01:42:55.549 Uttam Kumaran: I haven’t decided who pays for what yet.
548 01:42:56.550 ⇒ 01:43:03.539 Uttam Kumaran: I think mechanically. That’s how you could kick started. So let me just go ahead.
549 01:43:03.790 ⇒ 01:43:21.430 Uttam Kumaran: It’s kind of like uber you grow by market, right? So I just go get one person and get one in Austin, one in Houston. Maybe I have to get 2 or 3, but I don’t mean 30 or 40
550 01:43:21.510 ⇒ 01:43:32.930 Uttam Kumaran: that would be the way to scale. So so I was having a chat with him and not exactly this, but a similar concept, and
551 01:43:33.200 ⇒ 01:43:40.029 Uttam Kumaran: I can hear in one year, right on this conversation. She would go. Well, why don’t you just build a marketplace infrastructure
552 01:43:40.130 ⇒ 01:43:53.899 Uttam Kumaran: and let people sign up? So you build the tools for both the buy and sell side. And you say any registered broker can come and just open up their agent like literally open an agency on this platform.
553 01:43:54.930 ⇒ 01:44:06.490 Uttam Kumaran: So let’s say you’re a hotshot guide screen. So typically, what happens? The agency world should get good, you you and do that because it would
554 01:44:06.950 ⇒ 01:44:09.190 Uttam Kumaran: massively undercut
555 01:44:10.260 ⇒ 01:44:22.180 Uttam Kumaran: the people that they need. And they, it became effective for them pals. And the way this I think, usually works is.
556 01:44:22.700 ⇒ 01:44:41.040 Uttam Kumaran: we’re doing a bunch of stuff. We should get more of the economics, you know. Blah blah blah deals, and your cut is fraction. It’s like 70. I think they all just forked off somebody else. So instead of so we go do that. But instead of hiring 10 or 15
557 01:44:41.060 ⇒ 01:44:45.720 Uttam Kumaran: folks, we say we’re just gonna just gonna be us to our agency.
558 01:44:45.960 ⇒ 01:44:49.989 Uttam Kumaran: So it’s just us. But the almost all.
559 01:44:50.030 ⇒ 01:44:56.090 Uttam Kumaran: By AI. So you open. It’s just kind of a slight variation, I think of what you’re saying. Where
560 01:44:56.460 ⇒ 01:45:14.889 Uttam Kumaran: and the next thing you know all these real estate license people are operating on this platform, and because they’re on the platform, let’s say you’re a sales type person. I’m a bisect person. There’s now special stuff we can do with each other because we’re both on the same platform, but that that we still have our 6% commission that I don’t like.
561 01:45:16.190 ⇒ 01:45:39.729 Uttam Kumaran: So say more about that. Well, if she signs up on the platform and she’s already a broker, it’s just the same 3%. But
562 01:45:40.010 ⇒ 01:45:44.129 the other way is to say, there’s
563 01:45:44.210 ⇒ 01:45:46.260 Uttam Kumaran: and everything’s a fee for service.
564 01:45:48.160 ⇒ 01:45:56.770 Uttam Kumaran: Then you’re charging that to who, to the to either side I mean a really nasty, sneaky way to do it. If you have enough capital
565 01:45:57.240 ⇒ 01:46:00.180 Uttam Kumaran: would actually be to pay the fees upfront
566 01:46:00.930 ⇒ 01:46:06.030 Uttam Kumaran: and just get all the data until you don’t need the local expertise.
567 01:46:06.560 ⇒ 01:46:10.330 Uttam Kumaran: and then stop paying the fees, and the brokers go away.
568 01:46:11.840 ⇒ 01:46:17.529 Uttam Kumaran: All of the data sets in somewhere like Hostart.
569 01:46:18.910 ⇒ 01:46:46.339 Uttam Kumaran: That’s why I think you have to. Their partner requires some source of data like that. To have that. That data right now is is is pretty. Pricing is a C model. And that’s why they don’t do anything strategic value to
570 01:46:46.850 ⇒ 01:46:48.390 Uttam Kumaran: one of 3 assets.
571 01:46:49.860 ⇒ 01:47:05.850 Uttam Kumaran: One is that listing data that’s in co-star today. I may ignore it because I’ve never seen it. There’s that there’s the the collective context of understanding what the tenant really wants.
572 01:47:05.990 ⇒ 01:47:16.180 Uttam Kumaran: And then there’s what gentry really wants back to the envelope. Put your thumb over it, you know. High, medium, low, high, high, low.
573 01:47:17.480 ⇒ 01:47:18.689 N. One.
574 01:47:18.910 ⇒ 01:47:24.190 Uttam Kumaran: Thank you. Does that make sense? Can you rank those values for me.
575 01:47:26.880 ⇒ 01:47:44.149 Uttam Kumaran: I think you lost me there. What what I’m trying to say is, if like, take the magic you do when you sit down with a tenant. You track all the stuff so like. Now, you really know what they want, because what I heard is part of his problem is, they don’t really know what they want. And so it takes somebody like you to help them.
576 01:47:44.320 ⇒ 01:47:47.019 Uttam Kumaran: Let’s assume we could capture that in some
577 01:47:47.080 ⇒ 01:48:00.199 Uttam Kumaran: useful way. We think that’s gonna be in the same. Yeah. But but plus plus plus plus, this would be a way more sophisticated way to get capture. But you’ve got it. Okay. So that’s asset number one.
578 01:48:00.610 ⇒ 01:48:19.510 Uttam Kumaran: Asset number 2 is, he’s looking for people to lease his properties, and he has a set of criteria. And part of the problem is he kind of manually like he gives it not to brokers, but they’re slappy, and they don’t really listen to him, and he has a set of parameters he’s willing to adjust.
579 01:48:19.930 ⇒ 01:48:35.660 Uttam Kumaran: you know, credit and all these other things if he gets the right mix. Okay, that’s asset number 2, and then asset number 3, is this dumb listing service? It just says, here’s a property, this many square feet. Here’s an all shitty floor plan.
580 01:48:35.680 ⇒ 01:48:48.959 Uttam Kumaran: I don’t know what else is in subjectively just based on your this open ended for anybody. What’s the relative value of those 3 assets? I’m an opinion that I’m
581 01:48:49.370 ⇒ 01:49:04.799 Uttam Kumaran: discovery.
582 01:49:05.020 ⇒ 01:49:11.820 Uttam Kumaran: You have the seller criteria which he described, which is this encapsulated in this financial model that he has.
583 01:49:12.020 ⇒ 01:49:16.380 Uttam Kumaran: And then you’ve got this least common denominator
584 01:49:16.550 ⇒ 01:49:28.529 Uttam Kumaran: of a database consisting these things called listings. Yes, these listings don’t so imagine the information content. Does it say this is a hundred. and this is a hundred.
585 01:49:28.770 ⇒ 01:49:38.209 Uttam Kumaran: The information content is like at best. Cause I’m gonna go further. I’m gonna go further. I don’t think
586 01:49:38.480 ⇒ 01:49:58.299 Uttam Kumaran: because of where we are in the evolution of this. I think we’re under representing the sophistication of those 2 things. I’d add the word model to both, because II think she does it so naturally, she doesn’t really fully understand the depth of. I think that’s a profound statement. Let me just say it back another way. You do it. Enough
587 01:49:58.960 ⇒ 01:50:11.070 Uttam Kumaran: that whatever we do, we take grammar and you’re dealing with some high-end, very sophisticated people. She used to also work for an end user Morgan Stanley. She was a space planner. How unusual that is.
588 01:50:11.410 ⇒ 01:50:19.060 Uttam Kumaran: and those sort of skills. And that kind of that whole workflow, I think, is what he’s saying is, it’s very rare. So
589 01:50:19.570 ⇒ 01:50:23.180 Uttam Kumaran: on the on the buyer side. Let’s say my numbers are right.
590 01:50:23.460 ⇒ 01:50:31.369 Uttam Kumaran: Let’s say there’s a delta here. 60, 30 of it is sort of let’s just, you know, stop breaking down
591 01:50:32.020 ⇒ 01:50:34.400 Uttam Kumaran: right? And the same thing over here.
592 01:50:34.740 ⇒ 01:50:40.230 Uttam Kumaran: Difference here is probably all the difference between 20 and 100 is quite.
593 01:50:40.510 ⇒ 01:50:42.810 Uttam Kumaran: This is stuff in your head. Right? Yeah.
594 01:50:42.860 ⇒ 01:50:54.749 Uttam Kumaran: And you’re just saying, that’s a model. Yeah. And and way, I can model that. Yes. And so what is this? So now ask the question again. And so what I’m saying is you? You almost answered. The question is.
595 01:50:54.890 ⇒ 01:50:59.520 Uttam Kumaran: what is the relative value of those 3 assets? Cause cause I
596 01:50:59.850 ⇒ 01:51:13.120 Uttam Kumaran: with this is, I don’t think coastal matters. That’s where I’m going with it. Cause I think it’s on a scale one to 10. I’m gonna make this up. It’s a 2, and I think that the seller criteria might be.
597 01:51:13.150 ⇒ 01:51:32.339 Uttam Kumaran: and 8, and the buyer criteria might be a 20. Yeah, now that you frame it that way, I think. assuming you get adoption on the buyer side of it of the tool. And they start fueling this data. That’s gonna be yeah, more valuable than co-star itself, I guess.
598 01:51:33.070 ⇒ 01:51:34.250 Uttam Kumaran: Well, there’s 2.
599 01:51:34.480 ⇒ 01:51:37.110 Uttam Kumaran: There’s 2 ways. It doesn’t matter. One is use.
600 01:51:37.310 ⇒ 01:51:47.589 Uttam Kumaran: You just go direct, somehow, right? There’s a whole bunch of mechanics in here. But this is kind of what I was saying is, can you somehow facilitate a direct dialogue in market fluoride
601 01:51:47.850 ⇒ 01:52:02.979 Uttam Kumaran: it? What brokers and their database don’t aren’t the only path. So that’s one option. The other option is, you hire broker. So it’s this and this. So you just start so okay, fine. We’ll start with the listing. So I don’t have to go.
602 01:52:02.990 ⇒ 01:52:24.540 Uttam Kumaran: you know, like, you know, what I mean, like, right? That’s where I was going, is is, it’s kinda doesn’t matter to me strategically, because the the advantage of that is it lets me jump, start to go to market and not worry about. Oh, is it? Intostart? Screw it up? Pay the 16 grand a year. I’ll have one broker. I’ll test it in market. Learn what I don’t know.
603 01:52:24.670 ⇒ 01:52:33.200 Uttam Kumaran: I think the the big idea is capturing these fire requirements in a highly adaptive and sophisticated model.
604 01:52:33.530 ⇒ 01:52:47.299 Uttam Kumaran: That so and I’ll and then across archetypes. I’ll learn right? So we think about it like one like like you did Scott Ableton spice works big deal
605 01:52:47.600 ⇒ 01:52:51.389 after doing 10 of those. Yeah, I learned.