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In the autumn of 2019 I was invited to moderate a panel at MRI’s user conference. For those of you not familiar, MRI is a large software provider for the real estate industry. Originally they started as an accounting platform but have since grown into a full-fledged software platform for the property industry. That year the conference was at the Anaheim Convention Center, a sprawling campus of buildings across the street from Disneyland. The event took over almost the entire center and had a festive atmosphere. The CEO even came for his speech to a marching band. Filling the numerous halls of the event center were the company’s partners, each with their own booth like an exhibit hall of any other industry event.
At the time I wrote an article about the event titled Massive User Conferences Demonstrate the Importance of Tech Ecosystems. I compared what MRI and other big real estate software companies were doing to what tech giants like Apple and Salesforce had successfully done. Salesforce successfully created an ecosystem of partners that develop on its platform, Apple built an app store. In the end the dream of an open, collaborative PropTech landscape never materialized.
This year MRI’s user conference seems to have a much different feel. The website has no mention of partners participating and every session is about the product itself (one is about using Microsoft’s Azure platform which is an ecosystem that they are piggybacking on). Rather than creating an app store or a platform for co-development, MRI has aggressively acquired other companies in the space.
I don’t want to just single out MRI, every other large property software company seems to have the same approach. Yardi charges $20,000 per year for each integration with its platform. RealPage acquired one of its competitors, Buildium. CoStar has kept on suing any of its competition into the ground. Even VTS, which has positioned itself as the young, collaborative upstart challenging the status quo, built a marketplace that is only available to its users.
I also can’t say that I blame these companies for this strategy. Creating an ecosystem only works if you have a ubiquitous platform. No real estate software company has been able to control enough market share to make it work (maybe CoStar but we all know that they would never consider this kind of approach). Most of these companies have done a good job of helping users connect their system with others and share data in between. APIs and software development kits are much more common now than they were just a few years ago.
I think the PropTech industry has come a long way, but the promise of collaboration was never fully realized. The reason that companies like Microsoft, Apple, and Salesforce pursue the ecosystem approach is to accelerate innovation. One company can only bring so many new products to the market and the bigger the company is the more it tends to shy away from novel ideas. The truth is that there might just not be enough ways to innovate property software, how many apps could be spun out of an accounting platform anyways? I hope one day to see a more collaborative approach from PropTech platforms but, based on what I have seen, I am not holding my breath.
Overheard
Making amends
I by no means want to throw shade at MRI with my article, they have actually done a great job of pursuing partnerships. My qualm was more with my prediction than with any player in the industry. You can check out a full list of their partners here.
Our best
I love buildings that are bold enough to embrace street art. We recently published an article about the benefits and possible pitfalls of adding murals to the outside of buildings.
Other stories
We have been closely following the troubles of Chinese property companies and it seems like the Chinese government is starting to investigate what might be fraud in some of the cases. (Bloomberg)
One writer has made the case that the pandemic is not the only culprit for the excess of office space in many cities, a decades old tax code has also contributed to the glut. (WSJ)
More companies are shedding their offices and some, like Lyft, have even started to sublease their space in order to reduce the burden of their long-term leases. (Marketwatch)
