Matt Knight, PropTech Investor | How tech will get us back to the workplace | 29:10

Transcript

DA: Hi, I’m David Abrams, and I want to welcome you to this edition of the Tenant Experience Network podcast. I want to welcome today’s guest, Matt Knight, founder of PropTech Angel Group, an investor in early stage technology for commercial buildings. In this episode, we’ll learn about Matt’s journey to his current role as investor and board member, where he combines his learning from early days in private equity to becoming a PropTech nerd. We’ll tap into his thinking around how tech will get us back to the workplace as one of his keys to success and get a glimpse into what is top of mind for Matt as he continues to navigate through new challenges and emerging opportunities. We’re excited to be sharing this podcast with you, so make sure to subscribe so you never miss an episode of the Tenant Experience Network. Now I’d like to welcome Matt to the show. Hey, Matt, really glad you could be with us today.

MK: Aw, thanks for having me.

DA: So to sort of kick things off, I’d love to get a better understanding of your journey to your current role as, I hope I got this right, founder, investor, board member, and there might be a few other titles that I saw along the way, but just wondering how you got started and you can just walk us through that process.

MK: Yeah, sure, I came from the private equity real estate world. I worked for a company called Colony Capital, which is now Colony NorthStar and I managed a few hundred million of real estate for them in the last recession. And I left in 2013 to start my own thing. I started an investing firm with a partner and that was a lot of fun, but I pretty quickly realized I needed a way to differentiate what I did. There were a lot of people with more money and experience, a better golf game than I had, and so I had to, say, you know, “Why would Mr. Broker call me?”. And so my answer was just I’m going to use tech. I could open my computer and most guys I computed against could not and so I just became this PropTech nerd in 2013, when PropTech wasn’t a thing. You were just called a nerd. There was no such thing as PropTech. No, you were just a nerd. And so, that was me; eventually turned it into a venture fund, which I started with a partner, and we built that up. It was a lot of fun. We had a lot of strategic investors. We built an incubator with WeWork. We did an accelerator. Had a lot of fun as a micro VC kind of small, small early check seed round. And then ended up leaving last year, early last year, and ever since then, I’ve been out doing some angel investing with some of my favorite investors, which is a lot of fun. Do a little bit of consulting, as you said, trying to help my portfolio companies any way that I can and figuring out what I want to be when I grow up, which is, you know, may, maybe just an Angel Investor. I don’t know if they don’t make me grow up, I probably won’t, so that’s, that’s where I am right now.

DA: Well, first of all, it’s not a bad profession. I know a number of people that have done quite well and certainly it is exciting. Never a dull moment. So interestingly, we both have 2013 in common. That is actually the year that I wrote the strategy document for what ultimately became HILO, platform that I built and founded. And I agree with you in 2013, you know, PropTech certainly did not exist as a term. And when I went out to sort of share my idea with people within the industry, they looked at me like I was from outer space. Thank goodness, that’s all changed, but that was the year so…

MK: ‘We know tech. We have Excel, we use Argus’, you know, I know you’re saying.

DA: Right. So why do you think you were so uniquely suited to this opportunity? Any unique skills that have helped you to become successful in sort of, this path you follow?

MK: Is desperation a skill.. does that count? Like I just like trying to find like, scrambling to find a way to win deals? You know, it’s tough to say because it’s such an amalgamation of all the things you learn along the way and just, there’s so many amazing people in the space that it’s, I’ve learned a lot from the venture world. I’ve learned a lot from the C-R-E world. I’ve learned a lot from angel investors and my partner. So I don’t know that there’s any skill that I have I just kind of dumb luck and found a lot of really smart people that would speak when I’m around and I just can be scribbling Oh, yes and say that again, you’re like, I just have a lot of very bright people around me which has been very fortunate.

DA: Well, we’ll talk about influences in your life a little bit later on. So you let the cat out of the bag on that one. But that’s okay. You said desperation I think, you know, so maybe desperation is more state of mind maybe more determination is the unique skill or combination thereof I guess right?

MK: It’s funny, determination is one of those weird things where it’s very much glorified in the startup world but there’s also a point of like billiger determination where it’s like your square peg in a round hole man like so it’s like there’s a correct amount of determination.

DA: Right.

MK: Love forcing a solution where there is not a problem. So I think it’s a little over glorified in the startup space, it’s like keep hustling, three AM, yeah, go get them. It’s like, are you sure you got product in the market/field? like this should be a little easier than that. It shouldn’t be that hard. It should be hard, but not quite that hard.

DA: Well, as a founder, it is hard to realize it probably that maybe it’s not going to work because we are, it’s just inbred within us that, you know, we see the finish line, right? Really hard to let that go. I would imagine so far, I’m sticking with it. Any advice for someone wanting to follow a similar path?

MK: Ironically, it is just stay determined. It’s just there’s, most people won’t understand it. And so they won’t, they’ll, most people aren’t overtly mean, they just kind of subtly are like, Okay, good luck with that, right? They just kind of dismiss you off. And like, if you’re not stupid, you understand what they’re saying is like, that’s not going to work right? So no one says that to you, but they kind of imply it with, how’s your thing going, right? They came and tell you what you do. You know, we’re sure you know, that as startup founders, like how’s your app, you know, like, they just say it with disdain in their voice. And so, again, there’s this like, resiliency about like, ignore them, right? Like, there’s nine out of 10, or that person, and it’s okay, they’re not bad, they just don’t understand. And so that’s kind of the fun thing about being in PropTech. Now there’s enough of us now that do get it. And we will support you and will cheer you on. But yeah, you’re doing something worthwhile. Keep with it. So mine is kind of stick with it, but find a crew that will support you and understands what you’re trying to do.

DA: Right. So just a little bit off script in terms of PropTech and how it’s emerged. What do you think of the current PropTech space and the amount of activity, the amount of attention, just any thoughts? Given that, as we both pointed out in 2013, when we sort of recognize an opportunity really didn’t exist at that time?

MK: Well, what’s interesting in recording this in late summer 2020, is that answer is different now than it might have been eight months ago.

DA: Right?

MK: Because, like an office is basically you and I know. It’s a year ago, people would have said, Let’s all let’s keep up with WeWork in their design, we got to have creative office space, you got to be flexible. Now, it’s like, when someone asked me about the design of their office, I’d like, laugh at them. I’m like, if you can’t keep me healthy, I’m not coming back, no matter what it looks like, right? Don’t tell me how cheap the lease is or else sexy love yah, I don’t care if you have peloton like I’m not walking in that building until you tell me there is touchless access, there’s occupancy sensors, there’s extreme, incredibly high quality air quality monitors, like, like that’s, that’s what matters. So PropTech is having this almost tragic moment in the sun now where it’s like, tech is what’s getting me back to your office building in your retail center. And making me stay sane in my apartment like this is a tech problem. Not a finance problem, not a location problem, not the typical real estate stuff but as a tech problem. And so I think it’s having this, like I said, strangely fortuitous. And I don’t want to be callous to the devastation that COVID-19 has caused, because it’s been terrible. But it’s for some people to stop what they were doing and think about how can I add tech to my portfolio?

DA: Right.

MK: So it’s wildly more relevant now than it ever has been. And so I think a lot of the trends that were happening are just happening faster. And one of the early adopters and early majority are really, really paying attention, even in some of the late majority, if you kind of buy into the diffusion of innovation curve, are starting to have to pay attention to this right? The laggards still have their flip phones and they’re retired and they don’t care. But everybody else is saying, All right, I need it, we need it, we need to reassess this. So I think it’s a strangely extraordinary time right now.

DA: Yeah, I agree, it was hard for me to get into the mindset as to try to look for the silver lining of COVID. Because I just felt it was awful. And I’m generally not the type to sort of look, take a bad situation and try to find what’s what’s good in it. But I do agree, I think obviously, a lot has accelerated now as a result of this. And, you know, when we look at our platform, we really believe it’s moved, you know, from a vitamin to an aspirin, where there is a lot more need and given that tech is going to be so critical to people coming back to the workplace and the definition of workplace has changed so dramatically. It really is now work from everywhere and we believe that our platform, particularly not being just a building out, but being more of a network is going to help you bridge that divider, that gap, and provide a really interesting solution. So I’m with you there. What’s the biggest challenge you’re experiencing right now? And how do you think you’ll overcome it?

MK: Biggest challenge right now is I have more deals that I like than I have time to fund them, right? The problem with being an angel group is, there is no analyst there is no associate, it’s just me and a bunch of part timers trying to put capital into deals and I got to do a formal diligence and open bank accounts and form an LLC you know like that all that stuff. I have very limited bandwidth. And so I have probably revealed that within a fund context, I would be deeply interested in funding. And I can probably only do one of them because I only have time for one. So my issue is time constraints, not opportunities.

DA: So that’s really interesting. So I guess to that end, what then what if there’s the three that you perhaps do, but the one you choose to do, what’s creating that standard? What’s helping that one to jump above the other two?

MK: Part of the way I think about this is if you’re going to be a thoughtful investor, you have to be a mix of reactive and proactive, like we all have decks that come across our desk that we react to is a that’s a clever play, and not to you, not to me. But there’s also proactive and so you have your thesis that you pursue and say I think the future of work is going to look like this. I think there’s a few tech solutions. It’s all for that. And so I go look for those solutions in those companies. So I would tell you, the ones that most aligned with my admittedly arbitrary and subjective view on these thesis are the ones that I give priority to, right? And then when I feed them through my group and through my advisors and say, “Is this a real problem?”, “Is this compelling”, “Would you pay for it?”, “How much would you pay?”. You know, I asked my diligence questions. And I get a lot of vehemently positive feedback. Now I know I’m onto something, right? And so it’s, it’s actually a built in mechanism into the group as I have people looking at deals with me almost every day. And so when I hear people say, “Wait a minute, they’re doing what?” I have founders saying, “I’ll give you some money for that. Because that’s amazing, right?”. That’s when I know, I’m onto something from these guys that really know the space.

DA: You’ve got that real. Real world filter, embedded in your process, right?

MK: Because they have nothing to gain or lose from telling me that right? It’s not their company, they’re not pitching anything over. Like, I’m in these meetings with these landlords. And I’m telling you that what these guys are doing is remarkable. And so some of my best inbound leads come from my angels. They’re founders of PropTech companies that say, “I’m putting 10 grand to this company. Do you want to do it with me?”. That’s a very strong, that’s a very strong referral.

DA: Absolutely. If you had an extra $100,000 off budget right now, how would you spend it and why?

MK: On an analyst. I like just someone to do diligence and put together investment memos for me, like it just takes way too much of my time.

DA: Right. All right. Well, I’ll see what I can do for a hundred K. If not, I’ll send you my resume. Are there any resources? And so we talked a little bit about this in your opening comments but any resources, mentors, colleagues, books that have really helped you along your journey?

MK: You know, Warren Buffett has a quote about this when there was Charlie Munger, he talks about what’s your favorite investing book and it’s like, I’ve read 200 like, so I love Ben Horowitz’s book, but I just read a book by Annie Duke about Thinking in Bets. That was great. And I’m doing one now on essentialism. That’s really good. And I just finished one on The Courage To Be Disliked. I mean, again, there are 50 books, you know, Intelligent Investor by Ben Graham from the 20th, right? And then Ray Dalio’s Principles was really interesting to me. Right? And then again, there’s 50 bucks, 20 podcasts 5000 conversations like, it’s an agglomeration of collective knowledge, not like one thing. So I do, underwrite and write articles on a few books that really stand out. But I take pieces, like from each of them and apply them to my thesis in my stage in this century and you know, whatever their current situation is.

DA: Right, Interesting. Can you share any details about anything new, you’re working on? Something that you think our listeners might find interesting?

MK: It’s funny thinking about the Angel Group. Angel groups are fairly, they’re kind of all over the place. I mean, people most people don’t know what that means an ‘angel group’. And so what I’ve started little learning about our group is that we are as much just a community as we are a club of investors, I don’t really care how many deals we do. You know, I can’t say we do two, but we love them. And people love it. I’m very happy with that, right? versus the first question investment is how many deals you do? like, I don’t really care, right? And so what I’m working on is a lot of tools for engagement with our group. And so partnerships that people like Superpeer, that allow us to do paid mentorship for our members, I’m working on some cool internal tools, obviously, we’re growing our Slack community and kind of how people can trade deals and data and leads and partnerships. So everything I’m working on, on the group side is about just facilitating that community and trying, preventing myself from being the bottleneck, everybody should go through Matt because I don’t want that. I’m not interested in that. I want you guys to do remarkable things without me and I just provide the forum.

DA: Right, how competitive is the angel world right now, in terms of the network and the group that you’re building? You know, is it easy to access and find those that are interested in, able to invest in the kind of projects you’re working on? Is this a competitive environment? 

MK: So in terms of finding the actual investors or finding deals?

DA: Investors.

MK: I wouldn’t say investors are terribly hard to find, because I’m an investor. So it’s kind of what kind of brotherness I suppose. But I would tell you unlocking what matters to them and how to get them to show up and engage. There’s just some nuance in that, there’s some art beyond just the science because a lot of people say, “I don’t even have a group, I’m the greatest Angel that’s ever walked there is in Boston, right? I’ll need your help”, “Okay, right” or, “hey, I’m too busy running my company”, I’m going to do deals as I like to do them”, “I don’t have time”, Okay, no big deal, right So I don’t ever try and force anybody or sell anybody on this. It’s got to be something that really fits with your goals and lifestyles and financial goals. But I think that’s where more like the actual intro and the meaning of the people is not terribly challenging. The actual getting them to be engaged, which is probably something worth mentioning is the only thing I really asked for my members is, be engaged and respect the other members. Because if you don’t do those two, you have a problem. I don’t care how many cheques you write. I don’t care about your net worth. If you’re engaged, you’re going to help my portfolio and our portfolio companies, right? If you respect the other members, you’re not going to be spamming people with let me introduce you to my wealth management guy. Here’s some insurance you like, that’s not okay. But otherwise, I don’t have a lot of rules. If I need to give you rules, you’re not against it for the group anyway.

DA: Right, okay. If you could have one superpower, what would it be? And why?

MK: My superpower would be like the gift to sway other people’s minds and thinking. like if I could convince you, if I could just wave my fingers in the entire world thought that it was ‘you are okay the way you are’. I think that’s all about 80% of the world’s problems, right? Like if I could just get rid of that ego chasing and the like, you got to be better. And you got to keep up with that guy. And you don’t look good enough. You’re not smart enough, you know, no money. Like, I used to get rid of that. I think that would be a superpower. I want just everybody to chill the F out. Be okay with who you are. Be a little more comfortable in your skin, way less drama. So that would be my superpower is just like, changing people’s psyche a little bit.

DA: A little I love it. Maybe a little more tolerant, a little more patient.

MK: Yep.

DA: I love it. All right, well, there’s something there for sure. So listen, these are certainly unexpected times and lots of complexity in the world. What are you really curious about right now? Is there anything that has you thinking differently, in light of current circumstances?

MK: Differently in light of the COVID or in the kind of where we are in the cycle, or all of the above?

DA: All of the above.

MK: I think we’re at an interesting time, I mean, PropTech is kind of obvious. But I think there’s also this interesting time in Venture Capital right now, that I am trying to study and understand because Venture Capital got extraordinarily crowded over the last 10 years. And so what does that mean in terms of strategy, deal flow, execution, operations, recruiting, all that stuff? That’s a very interesting question. And so when do you expand overseas? When do you do deals outside of your home country? When do you lead around? When do you co-invest, right? Those questions to me, have changed over the last 10 years and are going to continue to change. How long are companies staying private or SoftBank and Fidelity welding going to keep people staying private for 12 years on average, which used to be four years, right and 80s? And so is that pendulum swinging back? And so to me, I think what I’m curious about now is, what does venture capital look like in 2025, or 2030? And how do those funding trends flow back down? Because in our space, right, WeWork tried to go public and they’re not a tech company but they got confused with tech companies. It seems Oh, PropTech, WeWork? Yeah, I know them. So right or Wrong, the public seems to think that’s a PropTech company right? When they didn’t, what did we learn from that? That’s an interesting question. How does that flow down to early stage investing? That’s a pretty interesting question to examine.

DA: Yeah, well, I think on that front, it’s just really too bad that they were considered a PropTech company or a technology company, you know, pretty much all along until that moment in time.

MK: Well you say that, but if Industrious goes public and they kill it, then we might be “yeah, go get ‘em Industrious” they kind of do the same thing, they’re a coworking management company, right? VTS will be really interesting, Airbnb is imminent, they’re going to be using- Procore is going to be interesting. I mean, there’s a lot coming up that could, I don’t say sweep that under the rug, but sort of change public perception slightly or at least alter it mildly. So I think it’ll be the next 12 months that will be interesting to watch the public markets and what PropTech is viewed as.

DA: Right, we spoke earlier about returning to workplace and you definitely have some thoughts, you know, for you it’s all around. You know, health safety well being, none of us can make predictions as to what that’s going to look like. Just any thoughts in general around what you’re seeing? You know, friends, family, colleagues around returning to the workplace, you know, industry professionals. What do you think it’s going to take? How long do you think it’s going to take?

MK: I would tell you I am sure like you do. I read a lot of articles on this cause it’s relevant to my day job. And so there’s the camp of like Facebook and you know, Shopify, we’ll never come back to the office ever again, right? And then there’s the get back in the office as soon as possible, no productivity happens outside these four walls, right. And I think like most people, I’m somewhere in the middle, I think many companies are being thoughtful. And I don’t know, what I’m grateful for is, people are asking these questions about, why do we have meetings? Why do you drive that far to work? And which means are really necessary in person? Right, like those questions should have been asked a while ago, right? If you were a thoughtful founder, you probably did. There’s a lot of companies that have been remote or distributed or partial, you know, very flexible on telecommute options. So this is not new to, let’s say 10% of the companies, right? But for the other 90 that really had to self examine, I’m fascinated to see where they come out. Because I do buy the ‘we’re not all going back to five days a week, nine hours a day in the office driving long commutes’. Like I think that time of 100% of that is over, I think that is over, right. But again, the like, no one’s ever back in the office. Nonsense, right? Like, we all need some interaction. We need some in person meetings or some whiteboarding, there’s some things that have to happen, some jobs that have to be done in person. So I don’t know where that works out. Some stats I’ve seen is 25 to 40% of the workforce survey, this is out of a D-C survey, are going to have some sort of remote or telecommute options going for permanently. I think that’s even low. I think it may be 60-70%. It could be 80%, that wouldn’t surprise me at all, cause I hear it from fortune 500 companies that are as old in the study as you can get in there, like this has been pretty good. Like we’re still ‘look at our revenue, we’re still doing fine.’

DA: Yeah, I think the number of companies that will accommodate a flexible work schedule is going to be much higher. The extent to which people actually work from, you know, home or remote or from anywhere, I think is going to really vary. Because I do really believe the companies that made those grand statements very early on, we’re going to be a virtually remote company forever. Today, I think they’re going to regret that comment and that decision. And I think they’re their workforce, when given an opportunity to work at other companies that have found ways to bring people back together and have those moments of creativity and spontaneity and collaboration, that’s going to be pretty enticing because I can tell you that my team, small but mighty, we’ve made it work, but it’s not easy. It’s not easy working remotely and not together in any way, you know, for a long period of time. So in order to and of course, we’re very focused on being part of that solution and helping buildings and businesses find ways to ultimately come back together and to your point, make them feel safe and secure. And also recognize that, you know that the building community now stretches way beyond the four walls of any building. So…

MK: And I think what’s interesting about it is, this thing that started having retail 10 or 15 years ago, maybe more around placemaking is this, is a place where you come and do more than one thing, right? You’re not just shopping at the shopping center, you’re going to spawn getting groceries and you know you’re doing a lot of different things, maybe you know, get your nails done, or whatever it is like it Topgolf was good at this where you would stay at top off for four or five hours like oh my God, I’ve been here for five hours, right? You didn’t even know it because it was such an enjoyable experience. So I think there’s going to be this pendulum swing, or maybe just the six already on trend, you really have to have a reason to stay for multiple hours. And a lot of the thoughtful landlords, I think are thinking strategically about that.

DA: Right? Yep, it’s going to be very exciting to see what unfolds what comes next. Anything you wish you had known when you first started it?

MK: I think I wish I had known that tech wasn’t the problem. And I’m going to say that again. As my son just opened the door.

DA: That’s all right.

MK: Right when I started this, it was like, hey, if only we had the tech, we would solve the problem. And what I realized is, the tech already exists, right? We just need to put it in packages. They’re usable for landlords and owners and tenants managers, right? So it’s like computer vision and blockchain like we’re not waiting on some new invention or you were looking more at use cases. So you’re not, I mean, like it’s not… We’re not waiting for tech innovation, waiting for the right application in our space. And I had thought there was more technological challenge. And that really has not been my experience.

DA: Right, so just continuation from that and guess what, you know, maybe a prediction in my last question. Do you think now that we’ve talked about technology being so critical to, forming part of the solution and bringing people back to the workplace, but in the mindset of the operators, that the the developers, the property managers, you know, what impact you think all of this will have on their willingness to adopt, to try, to experiment?

MK: This being COVID in 2020, and all this stuff?

DA: Yeah.

MK: I guess I think it accelerated, the problem will be in my opinion, is that they will be overwhelmed. And I think a lot of them will throw their hands up and say, There’s 30 people that do this thing. How do I know which one right? Which is part of what I get excited, like will call me like, that’s my job, right? Like, let me tell you the ones that I think are the most fundable and have the longest term prospects to them. So I don’t think it’s a lack of opportunity. I don’t think it’s a lack of desire, I think it’s a lack of the skill set to know how to underwrite a tech company or tech product. And so a lot of people don’t know how to do that. They’re underwriting properties and work on operations and streamlining property taxes. That’s not the same as is this computer vision company going to be around in five years? It’s a pretty different skill set. So, right. Anticipate there to be some increased appetite but also some increased frustration around like, I don’t know, like, we’ve put an R-F-P out and got 900 responses. Now, what do I do, right? Like, that’s, it’s not about availability of the tech, it’s about knowing which one to choose or which two or three, you should pilot with.

DA: Right? I agree and I think we’re seeing now in companies of all sizes, with more technology savvy, innovation, skill sets coming, you know, into the decision making process to help make that evaluation. But, you know, and for me, as a founder and talking with this industry, what we’re trying to do, really how we’re positioned ourselves is really trying to be of help, not just sort of selling in and competing just as another, you know, commoditized product, but you know, how can we demonstrate that we’d be a great partner, and that, you know, there’s really a lot of value out and we think we can help you in your business. And I think that’s also perhaps, you know, a point of differentiation that over time will hopefully serve as well.

MK: Partners is a good way to frame it. Because you can help people especially; you have a platform instead of a point solution. You can help people with their decisions and say, we integrate with these guys, are we any of those guys? Are we done in this one, like, you can give them feedback? If you are a partner versus just a vendor relationship? There’s a little less enticing, I would assume.

DA: Agreed, agreed well, these are certainly challenging times. I really appreciate your taking the time to chat with us today. I look forward to continuing the conversation and hope that we can stay connected and learn a little bit more about what’s on your radar and what’s working, what’s not. And continuing to see where this PropTech world takes us and how ultimately, you know, it helps commercial real estate, particularly at this moment in time.

MK: Well, happy to do and I appreciate you having me on and give me the time.

DA: Right, thanks very much, bye now. I want to thank Matt Knight for joining us on today’s podcast and for sharing his journey from early beginnings in private equity managing commercial real estate, to becoming an Angel Investor. Great learning for all our listeners and an opportunity to gain insights into what it takes to be successful in early stage investment. Please be sure to tune in again for future discussions with leading professionals and industry experts who all have something to say about experience in the built world and the impact that technology is having on the largest asset class in the world, commercial real estate. If you or someone you know would like to be a guest on a future episode, please reach out to me directly at david@hailoapp.com. And until our next episode, I wish you all continued success in building community where you work or live, thank you.

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