20VC: How LPs Can Add Strategic Value To Portfolio Companies & Why Real Estate Is On Every Whiteboard In Silicon Valley with Brendan Wallace, Co-Founder @ Fifth Wall

Brendan Wallace is a Co-Founder of Fifth Wall, the fund that specializes in technology for the built world and real estate tech. Prior to Fifth Wall, Brendan was Co-founder & CEO of Identified, a data & analytics company that raised $33 million of venture capital and was acquired by Workday (WDAY) in 2014. Brendan also co-founded Cabify, the largest ridesharing service in Latin America, which has raised $143 million and operates in 14 countries and 50 cities. If that was not enough, Brendan has been an active angel investor and manages one of the largest syndicates on Angellist, having led over 50 angel investments including Bonobos, Dollar Shave Club, Earnest, Philz Coffee and Zenefits. In Today’s Episode You Will Learn: 1.) How Brendan made the transition from the world of startup founding to investing with Fifth Wall? 2.) How does Brendan feel fund managers can approach LP composition in order to provide strategic value add to portfolio companies? How did he approach this? 3.) How do the differing sources of LP money differ when comparing corporate LPs to more traditional fund of funds and endowment funds? Why did Brendan decide it was optimal to have both in Fifth Wall? 4.) Brendan has previously said 'autonomous cars are the next meteor to hit the real estate industry'. What are the 3 differing types of risk that could prevent this rise? What timeline does Brendan believe we are looking at for self-driving? 5.) How does Brendan see the urban landscape evolving and developing over time? Will we see a renewed period of urbanisation or urban spread? How do the macro levers affect this? Items Mentioned In Today’s Show: Brendan’s Fave Book: The Accidental Superpower Brendan’s Fave Blog: CB Insights Brendan’s Most Recent Investment: VTS: The Leading Asset and Asset Management Platform As always you can follow Harry, The Twenty Minute VC and Brendan on Twitter here! Likewise, you can follow Harry on Snapchat here for mojito madness and all things 20VC. Eight is a sleep innovation company. With their latest product, the Eight Smart Mattress, being a bed that literally tells you how well you slept last night, paired with an intelligent sensor cover that measures the quality of your sleep and delivers a daily sleep report. In order to bring you the best product, Eight used anonymized sleep data and feedback from over 10,000 people, to understand which materials and types of mattresses give customers the best sleep resulting in their unique blend of four responsive and high-density foam layers plus one layer of proprietary technology that helps people track and improve their sleep. You can check it out on Eightsleep.com – and if you use the code 20VC you will get a whopping 20% discount! FullContact provides the ability to organize your contacts, gain rich insights into them and therefore build deep relationships. With features like automatically identifying and merging duplicate contacts to the ability to snap a photo of a business card and FullContact will transcribe them for you, so no more lost and loose business cards at events. It is with these features just being the tip of the iceberg, FullContact really is the best all in one solution for contact management and you can check them out on fullcontact.com.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Harry Stebbings?

  You are listening to the 20 minute VC with me, your host, Harry Stebbings on Snapchat at H Stebbings with two Bs. It would be great to see you there. However, to the show today, and with the ever increasing need for differentiation in the VC market today, many are suggesting that the future lies in thematic specialization. Well, I'm delighted today to be joined by Brendan Wallace. Now Brendan is a co-founder of Fifth Wall, the fund announced yesterday that specializes in technology for the built world and real estate tech. Prior to Fifth Wall, Brendan was on the other side of the table as co-founder and CEO of Identified, a data analytics company that raised 33 million of venture capital and was acquired by Workday in 2014. Brendan also co-founded Cabify, the largest ride-sharing service in Latin America,

• 0:41Harry Stebbings?

  which has raised $143 million and operates in 14 countries and 50 cities. If that wasn't enough, Brendan's also been an active angel investor and manages one of the largest angel list syndicates, having led over 50 investments, including Bonobos, Dollar Shave Club, Phil's Coffee and Zenefits, just to name a few from the incredible portfolio. I do also want to say a massive thank you to previous guest Judith Elsia at Weathergauge for the intro to Brendan today, without which this episode would not have been possible. But before we dive into the show today, I really want to talk to you about a company that's really changed the way I sleep and operate. Eight is a sleep innovation company with their latest product, the Eight Smart Mattress, being a bed that literally tells you how well you slept last night, paired with an intelligent sensor cover that measures the quality of your sleep and delivers a daily sleep report.

• 1:26Harry Stebbings?

  In order to bring you the best product, Eight used anonymized sleep data and feedback from over 10,000 people to understand which materials and types of mattresses give customers the best sleep, resulting in their unique blend of four responsive and high-density foam layers, plus one layer of proprietary technology that helps people track and improve their sleep. This is perfect for people like me, people who want to be more productive during the day, who use or have used a fitness tracker and wants to take care of their health and fitness and sleep. And if that is you, honestly, you have to check it out on eightsleep.com. And if you use the promo code 20VC, that's two zero VC, you'll get a whopping 20% discount. And with Eight keeping me productive with a home product, Full Contact is keeping 20VC team on top form.

• 2:10Harry Stebbings?

  With Full Contact, they provide the ability to organise your contacts, gain rich insights into them, and therefore build deep relationships with features like automatically identifying and merging duplicate contacts, to the ability to snap a photo of a business card and Full Contact will transcribe them for you. So no more lost and loose business cards at events like I always suffer from. It's with these features just being the tip of the iceberg that Full Contact really is the best all-in-one solution for contact management. And it truly has changed the way I not only manage my contacts, but engage with my contacts. And you can check them out on fullcontact.com. But it's now time for me to shut up and I'm thrilled to welcome Brendan Wallace, co-founder at Fifth Wall.

• 2:53Speaker 01

  You have now arrived at your destination.

• 2:56Harry Stebbings?

  Brendan, it's such a pleasure to have you on the show today after hearing so many wonderful things from Judith at Weathergauge. But thank you so much for joining me today.

• 3:03Speaker 02

  Yeah, thank you for having me. I'm excited to be here.

• 3:06Harry Stebbings?

  I'd love to get started though, Steve, by discussing a little bit about you and how you came up with the idea for Fifth Wall. And then what Fifth Wall really is.

• 3:14Speaker 02

  So we kind of came up with the idea for Fifth Wall, me and my co-founder. We both had this like hybrid experience of having worked in the traditional real estate industry, but then having also worked in tech. So my background was I came from a traditional real estate background. So after college, I worked in real estate at Goldman, I worked in real estate investing at Blackstone. And then I kind of made an about pivot in my career at business school at Stanford. I caught the entrepreneurial bug, ended up launching a tech company, grew really quickly, raised 35 million, and then we sold to Workday. And so it's actually interesting because you don't see a lot of people that have worked in traditional real estate and then worked in tech. For some reason, that's kind of a rare breed. And my co-founder, he had the same background. So after Harvard, he worked in traditional real estate banking and real estate investing.

• 3:59Speaker 02

  And then he actually went on to co-found this company Invitation Homes, which was the largest owner and operator of single-family homes in the US, which sounds on the face of it like a real estate company. But really what they built was a technology stack that enabled their partner, which was Blackstone, to buy programmatically using automatic valuation models.

• 4:20Speaker 02

  Thousand homes in fifteen different markets and basically invent an entirely new asset class of real estate. That company actually just IPO a couple of months ago. It's about a six, six and a half billion dollar company. And that was really, I think, the first example of like this next generation of tech-enabled real estate company. And so Brad and I just were talking a lot and we had been connected through our experience at Blackstone. And we saw this large opportunity in real estate tech. Obviously, you have real estate, which is the largest industry in the U.S. It's fourteen percent of the U.S. economy. It's the largest asset class. It's the largest lending category. It's the largest store of consumer wealth. But I think we can all appreciate it's been an industry that has been slow to adopt technology.

• 5:03Speaker 02

  So you have all this opportunity, kind of just from a pure market perspective. I think the other thing that's interesting is even in spite of that, it's still produced enormous amounts of value. So if you just look at, you know, two of the three largest unicorns today are real estate and hospitality tech. We work in Airbnb after Uber. And then beyond them, there's another two hundred and fifty billion of real estate and hospitality tech companies out there in the public and private market. So we were kind of looking at this opportunity. We said, you have a big industry early in its adoption of technology. It spends a very small percentage of industry revenue today on I T. It's produced enormous amounts of enterprise value, enormously large companies. And yet we couldn't really find many focused funds on this particular category.

• 5:48Speaker 02

  And real estate is a fairly idiosyncratic industry. So we just thought it'd be really interesting to build a platform to approach that industry. And we kind of added our own unique twist, which was involving our strategic investors. But it really started with, wow, all this opportunity, large industry, early in its adoption of technology, and just saw a big opportunity there.

• 6:10Harry Stebbings?

  So before we dive into the, the element of the LPs invested in you, I do want to take the amateur perspective from my side, just so I can understand this. I'm more of a software guy. How does the risk profile change when looking at real estate technology versus the traditional software, potentially SaaS that we've been looking at in previous years? What's the difference? Risk and what does it mean for that?

• 6:31Speaker 02

  So it's a great question. I think it's something that makes real estate tech its own beast, its own kind of unique category to invest in. So a lot of times in tech, right? You face technical risk. You face real important questions like, does the technology work? If it's adopted, will it have positive ROI? These big existential questions like, does what you're investing in actually work? I think what's different in real estate tech is that because the industry has been such a late adopting industry. And as a result, because there's so much low hanging fruit in the industry, meaning you and I could walk around an office building and look at how things are done and say, that's inefficient, that's inefficient, that's a service based industry, you could do better with technology.

• 7:12Speaker 02

  There's so much opportunity that oftentimes the innovations themselves are fairly simple. It's like, we take a ledger book and we put it in the cloud. That is actually real innovation in real estate. So what I mean to say by that is that the technical risk is oftentimes very low in real estate tech. Like the innovations are oftentimes fairly lightweight, but, and here's the catch, the go to market and distribution risk is enormous. And that's to say, it's very hard to take a technology and sell it one by one to all these individual real estate owners. What you really have to do as an entrepreneur is find a way to get in front of one of the major institutional owners of real estate. The major landlords, the major hotel companies, the major mall companies.

• 7:56Speaker 02

  And that's actually very hard, in part because those companies have been also slow to adopt technology. And we saw that risk over and over again. And that was kind of the kernel of the idea that that led to Fifth Wall. I was thinking through, wow, you have this weird risk where you have very low technical risk, very high go to market risk. And yet a handful of incumbents, a handful of big corporates really dictate who wins and who loses in real estate tech.

• 8:21Harry Stebbings?

  I I really wanna dig into those corporates though, because I wanna discuss the LP base backing you. And and discuss that and the strategics involved. So a two hundred and twelve million dollar fundraise. Firstly, a massive congratulations on that.

• 8:33Speaker 02

  Thank you.

• 8:34Harry Stebbings?

  But but how was the fundraising won? And how did the LP composition look for you in your mindset when building out the LP fund?

• 8:42Speaker 02

  Yeah, so when we started, you know, initially, we had the idea that real estate tech was big. And the initial idea seemed kinda kooky at first. We said, what if we could get all the largest owners of real estate in our LP base? Which was a crazy idea. Like, what if we could get all these big hotel companies, all these big office companies, all these big mall companies? To become LPs in our fund, just like normal LPs, like an endowment, like a pension, like a fund of funds. And that was really the first process we undertook. We said, let's go out, let's break the real estate universe up into kind of its major food groups. So brokerage, retail, office, industrial, and get one of the major incumbents. So like many things in the real estate industry, once we got one, they kind of all came in.

• 9:25Speaker 02

  So we first got CBRE, the largest commercial brokerage, then we got Prologis, the largest industrial RE. Then we got Lennar, the second largest home builder in the US, then Maserich, the largest mall owner. Equity Residential, largest apartment owner, Heinz, which is the largest office developer. Host Hotels and Resorts, Lowe's Home Improvement, some of the biggest names in kind of the built world, these big incumbents came into the funds. The first roughly hundred and ten million dollars we raised was almost exclusively from these large corporates. And once we had that, the positioning of our fund became a little more clear. Because we then went to all the traditional LPs, the endowments, the pensions, the fund of funds.

• 10:06Speaker 02

  And we said, look, we've built this base of really forward-looking corporates that are committed to adopting technology. And so we're gonna have three main benefits that I think a generalist fund wouldn't by virtue of having pursued this strategy. One is we kinda have this asymmetric information, right? We're talking and we're collaborating with these corporates about what are the technologies they're going to adopt? What are they going to use? Are their pain points. Number two, we can influence the outcomes, right? So we can find early-stage companies, we can help grow and accelerate their business and kind of play kingmaker for them. And three, we can invest very opportunistically in companies. We can kind of claim our own stake because we have this ability to influence the outcome.

• 10:49Speaker 02

  And frankly, once we had that, they all came in pretty quickly. So it was a relatively short fundraise. It was about six months.

• 10:55Harry Stebbings?

  Can I, can I ask a very blunt and brutal question then? With such value add from strategics as you position there, why have the traditionals? Surely, you know, I'm sure you could have raised the restaurant strategics, adding more and more value. What was the purpose of adding the fund of funds, endowment funds, pension funds to you?

• 11:14Speaker 02

  Yeah, it's a, it's a great question. I think there's two reasons why we didn't. Number one, in the real estate industry, sometimes these corporates can be somewhat competitive with each other. And so within, for example, the hotel industry, or for example, in the mall industry, we wanted one corporate, right? So there wasn't this kind of ambiguity over who we're working with. If we had one big corporate, we knew that was kind of sufficient. I think the second thing was, we just saw a really big financial opportunity in real estate tech. This is a category where two billion dollars went into real estate tech alone, another billion and a half went into hospitality and travel tech. So we knew this space was kind of going to become quite large. And so we wanted to bring in just strong financial LPs that can be here for multiple funds.

• 11:57Speaker 02

  So it's kind of striking that, that balance here between, we want the corporates, but corporates obviously are, working with them is very different than working with a traditional LP. Right? A lot of times venture fund will raise money from their LPs and they'll send them a quarterly letter and they'll say, hey, here's where we put your money, right? Once a quarter. In our case, it's a much more dynamic, interactive engagement. We're talking to them on a daily basis, we're flying out to see companies, we're piloting. In some cases, we're kind of finding kernels of an idea and helping seed it and almost incubate it. So it's, it's a very hands-on, very intimate, very high-trust relationship we have to build and maintain with these corporates.

• 12:36Harry Stebbings?

  You obviously discussed the specialization there and the inherent value add that comes from such. Specialisation. I'm intrigued, isn't there extra risk in being so vertically focused on just one industry?

• 12:47Speaker 02

  Yeah, I think there is. I think inherently, right, when you're focused on one particular industry, you're you're exposed to kind of larger amounts of cyclicality. And we have cyclicality both in venture capital markets, right, that real estate tech or travel tech or hospitality tech or construction tech falls out of favour. I think the second thing is you're also exposed to the real estate markets, right? You know, if we're raising our next fund and one of these guys has a bad earnings call, that can impact us as well. I think where that's mitigated is in in our ability to kind of not have to compete for rounds. So a lot of generalist funds, right, they oftentimes wait for companies to raise money. It's a fairly competitive bidding process and oftentimes it's the highest price wins.

• 13:28Speaker 02

  We've done to date seven deals and in none of those deals have we participated in competitive fundraising processes. We've always approached companies opportunistically or we've opened up rounds or we've structured commercial partnerships alongside our investment. So i- it's more so that we can control our own outcome. We can control our destiny around when we invest in companies. So we're not really as subject to massive capital markets upswings. We're still exposed to the downswings, but it just puts us in a little bit of control as well. And and one of the things I would also highlight is that for R L Ps and one of the reasons we've had a lot of other strategics that want to come in is that

• 14:08Speaker 02

  we've almost built this community of like-minded, thoughtful tech or word corporates and and the folks in those companies that are committed to technology and they're actually sharing best practices and ideas and collaborating around what are the technologies that might be relevant for the office sector, but could therefore be relevant to the industrial sector, the retail sector. And they're finding these areas of like cross fertilization and synergies between them. So it's as much building kind of a an edge, right, to get into deals as it is building almost like a a black hole of information around real estate tech and putting all these corporates together.

• 14:45Harry Stebbings?

  Can I ask, how do you think the generalist V C's of the world in Benchmark, Sequoia, Lightspeed will respond to? Such versatileization and strategic value add that you have.

• 14:55Speaker 02

  So, well, I think we actually have some some proof points on that around how the the generalist funds have reacted to this. I think obviously the big brand names out there, the benchmarks, the Sequoias, the Lightspeeds, I mean, they're going to get tremendous deal flow no matter what. But I think what they've realized is that real estate tech, let's just focus on our particular industry. Real estate tech is a massive opportunity. Think on whiteboards all across Sand Hill Road, real estate tech is written somewhere and double underlined. It's obviously a big area of focus for them, but it has this unique risk profile, right? It it has this question around, you can have a great technology, but if you can't find a big corporate partner, it's very hard to scale your business.

• 15:36Speaker 02

  So that's actually where Fifth Wall comes in, is we oftentimes will go to generalist funds and say, hey, we're looking at this company, we'd love to have you involved. And the converse of that is that we're now getting a lot of deal flow from the generalist funds. We're saying, hey, we looked at this company, seems pretty interesting, we're intrigued by the team, we're intrigued by the product. We'd love to see what CBRE thinks about this. We'd love to see what Host Hotels thinks about this. We'd love to see if Lowe's could carry this in their stores. And because of that, we get this ability to become partners with them. So it's almost like we're the specialists.

• 16:08Harry Stebbings?

  So this is a this is a collaborative financing approach.

• 16:11Speaker 02

  Exactly, and and we're not going to compete, obviously, with Benchmark and Sequoia and Lightspeed. They've built and invested in amazing companies for a long period of time. And so when it comes to kind of general company building and pattern recognition, I think we're really an early stage fund. We're just getting our ski legs under us. Where I think we're very established and where we can be experts is around specifically helping companies in built world technology grow and scale. And that's really valuable to a lot of these these generalist funds.

• 16:39Harry Stebbings?

  I I do want to kind of specialize particularly on one element, though, within your space that's interesting for me. And it's the effect of autonomous vehicles on real estate and infrastructure, obviously disrupting all facets of transportation industry. So I'm really intrigued to hear what fundamental problems that this could create. And is this the kind of issues that strategic investors with you think about?

• 17:01Speaker 02

  Absolutely. I think the real estate industry has come to recognize that it used to be, I'll kind of back up for a second. It used to be the real estate industry thought of itself as, look, we collect rent, you know, every month. We're a traditional business. We don't have to worry about technology. And then a bunch of kind of big shocks like came to the industry. One, I think that's very recent and very topical is Airbnb, right? The hotel industry for a while kind of denied that Airbnb is really going to be a competitor. It's a different product. It's a different market. Well, it turns out that's wrong, right? We all can recognize now Airbnb is fundamentally competitive with the hotel industry. And so I think what's happened is that a lot of real estate investors are looking at the advent of autonomous cars as the next meteor that's going to strike the real estate industry.

• 17:46Speaker 02

  I think what's unknown today is how does that change things? Like, what are the shifts in asset values, in the importance of location, in the importance of logistics and infrastructure around assets that's going to be driven by autonomous cars? There's some probably pretty obvious point. So if you own airport parking, probably not a good idea to own airport parking. That's fairly intuitive, right? No one's going to park a car at an airport probably in 10 years, or very few people will. I think some of the more broad questions of like, will suburbanization and urban sprawl expand or contract? I don't think we know. I think we do know that autonomous cars, right? People oftentimes think of autonomous cars and they'll say, well, autonomous cars means I'm just going to sit in my car face forward

• 18:28Speaker 02

  and instead of putting my hands on the steering wheel, I'm going to put my hands on my phone. But in fact, most likely autonomous cars will change their form factors. And so a lot of the activities we think of as taking place in a stationary environment, like sleeping or eating or watching a movie, may actually take place in the car environment. And if that's true, I think two things change. One, the cost of commuting will go down, right? And Uber today, about 30% of the cost is the driver itself. So it'll be cheaper to travel longer distances. But also the pain and the inconvenience will change. And so a lot of what real estate owners are thinking about is, are cities going to become so expansive, right? Is it going to be actually convenient for someone to live two, three hours outside a city? And what does that mean?

• 19:11Speaker 02

  Mean for retail, what does that mean for where bedroom communities and apartments are located? What does that mean for central business districts and where these urban cores are? I don't think anyone knows. What I do think, though, is everyone in this industry is focused on it. Like, this is the shock that the real estate industry is most concerned about and thinking about on a daily basis.

• 19:32Harry Stebbings?

  Can I ask, I'm I'm super bullish on the expansion of kind of CBDs and suburbanization outwards. Provided case that answers the contraction element of kind of urban environments contracting with autonomous cars. What is that argument?

• 19:48Speaker 02

  Yeah, so that's an argument, right, that people have been saying for a while, which is you're seeing this shift of millennials, right? They they want to live in cities and there's been this kind of reurbanization of a lot of areas. Our generation, I assume our generation, the millennial generation, is the first generation to earn less than our parents. And as a result of that, the affordability has gotten worse in these major cities. So a lot more people are renting for longer in life. They're not buying homes in the suburbs as much. And actually, you've seen the rise of next gen living concepts, whether it's like micro apartments or co-living, these kind of like shared communal living facilities that actually are quite becoming quite large in real estate tech.

• 20:29Speaker 02

  And so you're seeing almost like this sociological and just demographic push inward. And so I think there's an inherent tension there, which is when it becomes easier to commute, do you just want to live someplace further afield that's prettier? Or are these poles towards kind of the urban core, are they tighter? I mean, you look at what's happened even in San Francisco. I think there used to be a lot more tech companies that were based in the peninsula and outside of San Francisco. And what's happened is that because these companies want to attract millennials and younger workers, they've relocated to the urban core, right? So a lot of startups now are moving back to San Francisco. A lot of VCs have chased them and they've moved back to San Francisco. So there's an inherent tension there. I think the short answer, Harry, is no one knows, right?

• 21:12Speaker 02

  It it's kind of a big, open question. But there there's a lot of interesting dynamics around how autonomous cars are going to change that. When you just kind of back up for a second. Second, and you think about the US real estate industry as a whole. The US real estate industry is predicated on the assumption that we're going to spend forty minutes a day with our hands at ten and two, looking at the bumper in front of us. And and like that that defines why offices are located where they are, why shopping centers and malls are located where they are, where we live where we do, where we play where we do. Like, all of these basic human activities are conditioned on the car. And when the car itself changes, like you just think about how much time it took for the smartphone to get to forty minutes of usage a day.

• 21:55Speaker 02

  And now, the smartphone, I think I've heard the latest status, like a third of our waking hours is basically on the smartphone. The car has that today. And once you have commercialization, the the shift, I think, is going to be enormous. So I know I'm giving a kind of vague answer because I don't know the answer. I think our big corporates don't know the answer. What I do think is they're looking to technology innovation as a way to form a view on that. They believe tech innovation can help them.

• 22:21Harry Stebbings?

  Can I ask, do you think the thing preventing the fundamental shift is the mechanical risk? Or do you think it's the educational risk on the side of the consumer?

• 22:29Speaker 02

  So I I think it's really three drivers that will dictate the future of autonomous vehicles. I think one is a technology risk. Like, when will we actually have the capability of having fully autonomous cars? We have partial solutions today, and you can debate that at length. But I actually think that's the easiest risk to condition. Like, we are going to figure that out. There is a future where we will be able to produce cars that are fully capable of driving themselves in all conditions, in all circumstances, on roads with human drivers or car or mechanical drivers around them. The second question, which I think is interesting to look at Tesla around, is price point, right? If only the wealthy can afford these autonomous cars, it doesn't really matter. You're not going to have mass adoption of it.

• 23:12Speaker 02

  So the price point of these fully autonomous cars has to drop to a point where you can have mass adoption. That I don't know. I think it'll be interesting to see with Tesla's new model how that fares. Um, I think the third question is regulatory. There's all sorts of complications around our existing road infrastructure.

• 23:31Speaker 02

  Even big ethical implications like what do you program a car to do in a definite accidents accident scenario that we haven't really wrestled with where liability lies in an accident, no one has really wrestled with that. I actually think that is the biggest unknown. So it's really an unknown. We've kind of looked at a study that said people think it's between, you know, if you they surveyed folks in the automotive industry, they surveyed technologists, they surveyed regulators, and the consensus was it's sometime between 2025 and 2035, which is a pretty wide swap of years. So I don't think we know, but what I do think is you'll start to see impacts on real estate values much sooner, right? Because most investors that are buying real estate are buying it for five to 10 to

• 24:15Speaker 02

  15 years. And so they're going to include this in how they value these assets. So even though the mass adoption might not happen for a long time now, I think the impact on real estate could happen on a much more accelerated basis.

• 24:27Harry Stebbings?

  Absolutely. No one's going to be buying airport parking for the next 10 years.

• 24:30Speaker 02

  Yes, well, you'd be surprised. You'd be surprised. There's a there's an interesting dynamic amongst real estate investors that we saw where it's like some want to take the approach of put your head in the sand, right? Technology is not important. You don't really need to have a view on it. We'll see how that strategy works out. Other investors are much more committed to reinventing their business. In particular, one of our partners, Mace Rich, I think because of obviously the emergence of e-commerce, there's still always going to be a place for physical shopping, but they see technology as really driving the future of what the mall, which is really like the town square. It's where people go to meet and convene and experience new products. They see technology as the future of that.

• 25:13Harry Stebbings?

  But I want to dive into a quick fire round now and my favorite element of any interview. So it's 60 seconds per answer. How does that sound?

• 25:20Speaker 02

  That sounds great.

• 25:21Harry Stebbings?

  So let's start with your favorite book and why?

• 25:24Speaker 02

  So my favorite book is actually not a book related to to real estate tech. I love this book called Accidental Superpower. It's an amazing book about kind of the decline of globalization and simultaneously the rise of populism. The book was actually written about three and a half years ago, I believe, and it is actually Really prescient. It actually, it almost predicts in a weird way Brexit and frankly Trump and a lot of things that kind of we've we've just accepted as our new reality. You could see the precursors of very early on. I think it's an absolutely amazing book.

• 25:55Harry Stebbings?

  As a new VC, what would you most like to see change in VC? You've had that outsider's perspective now in there. What would you like to see change?

• 26:02Speaker 02

  Great question. A lot. So it's hard to answer this in sixty seconds, but I would say what I would love to see and what I hope Fifth Wall is about is that we believe more differentiated sources of capital should emerge. So sources of capital that aren't just providing money to companies and kind of undifferentiated advice or guidance, really differentiated capital that can help a company in a very specific way. And by the way, we're doing that on an industry basis, but we've seen VC funds that have a particular, almost like operational focus, like we're very sales and marketing focused. Or we're the folks that are going to help you hire the best machine learning and AI teams.

• 26:40Speaker 02

  But I think having those very specific, very differentiated value adds is going to be really important because venture capital is competitive and finding that edge, I think is core.

• 26:49Harry Stebbings?

  What was the most challenging element of the fundraise and how did you overcome it?

• 26:53Speaker 02

  The most challenging element of our fundraise was kind of relates to my last question. It was building something differentiated. I think we believed that real estate tech was going to be big. I think at the time, maybe that was a newer point of view, but it was becoming consensus. I think now it's kind of fully consensus, but it's really not enough just to say this is going to be big. We want to go invest in it. What we really struggled with was how do we find a way to engineer an edge? How can we really help our portfolio companies by virtue of having strategics? And also, how do you pick the right strategics, right? How do you pick the companies that are most committed to technology as being a fundamental part of their future?

• 27:34Speaker 02

  And that was really hard. You know, literally, we kissed a lot of frogs. We had a lot of meetings with pretty much everyone in the real estate industry. So that was really hard, that kind of first step, raising that first, as I said, hundred and ten million from strategics was was very challenging.

• 27:48Harry Stebbings?

  What's your favorite blog or newsletter?

• 27:50Speaker 02

  I love CBN. Sites. I think it's it's it's an amazing, there's just such amazing content they produce, both visually, I love reading their their infographics, but I also love the fact that they're very quantitative and kind of data driven in how they position themselves. There's a lot of qualitative news you can get on what's happening in tech, but I think actually looking at the numbers and looking at performance i- is really interesting. So it's kind of brought a level of almost like analytical rigor to the venture capital industry that that we haven't seen from a lot of other sources.

• 28:19Harry Stebbings?

  And then this one's interesting. I don't know if you have any warehouse deals or any in the pipeline, but the most recent publicly announced investment, which would be interesting considering the fund isn't public yet, but the most recently announced public investment and why you said yes.

• 28:32Speaker 02

  One of the most interesting investments, and frankly, one of our most recent, is a company called VTS. It's a company that not a lot of folks have heard of, because frankly, if I described what they do, it'd be probably a little boring. It's leasing and property management and portfolio management for the office bill, for the office industry. But this is a fascinating company because literally this company has basically a monopoly on this category. And what's even more interesting is that they've built a true software suite. It's kind of like ERP software, but for the real estate industry. But what's fascinating here is that what they're competing against isn't some incumbent. They're not competing with Oracle, they're not competing with SAP. They are competing with spreadsheets. They are competing with my old job at Blackstone, crunching numbers in Excel and telling my

• 29:16Speaker 02

  boss what the role schedule is for some office building. They do that computationally in the cloud dynamically. So it's a really interesting business because it's not something that you'd think of as, oh, that would be a big business. But when you look at the numbers, portfolio management and property management and leasing management is an enormous industry that is effectively all offline today. They're really the first company to bring it online.

• 29:39Harry Stebbings?

  And Brendan, it was such a pleasure to have you on the show. As I said, I heard so many great things from Judith, but thank you so much for joining me today.

• 29:45Speaker 02

  Yeah, thank you. It was a it was a pleasure talking to you.

• 29:50Harry Stebbings?

  Again, a huge thanks to Brendan for giving up his time today to come on the show and incredible to hear his journey to today with Fifth Wall and incredibly exciting times ahead for them. And if you enjoyed the show today and would like to see more from us, then you can follow me on Snapchat @HStubbings with two Bs. But before we leave you today, I really want to talk to you about a company that's really changed the way I sleep and operate. Eight is a sleep innovation company with their latest product, the Eight Smart Mattress, being a bed that literally tells you how well you slept last night, paired with an intelligent sensor cover that measures the quality of your sleep and delivers a daily sleep report. In order to bring you the best product, Eight used anonymized sleep data and feedback from over 10,000 people to understand which materials and types of mattresses give customers the best sleep, resulting in their unique blend of four responsive and

• 30:35Harry Stebbings?

  high-density foam layers, plus one layer of proprietary technology that helps people track and improve their sleep. This is perfect for people like me, people who want to be more productive during the day, who use or have used a fitness tracker and want to take care of their health and fitness and sleep. And if that is you, honestly, you have to check it out on eightsleep.com. And if you use the promo code 20VC, that's 2-0-VC, you'll get a whopping 20% discount. And with Eight keeping me productive with a home product, FullContact is keeping 20VC team on top form. With FullContact, they provide the ability to organize your contacts, gain rich insights into them, and therefore build deep relationships. With features like automatically identifying and merging duplicate contacts, to the ability

• 31:16Harry Stebbings?

  to snap a photo of a business card, and FullContact will transcribe them for you. So no more lost and loose business cards at events like I always suffer from. It's with these features just being the tip of the iceberg that FullContact really is the best all-in-one solution for contact management. And it truly has changed the way I not only manage my contacts, but engage with my contacts. And you can check them out on fullcontact.com. As always, I so appreciate all your support and I cannot wait to bring you Friday's episode with Bill Clarico, founder and CEO at WePay.