Archive for May, 2016
This is a straightforward question. And for a real estate app, there are 3 primary answers:
- Generate more business. The app will ultimately generate leads, referrals and/or transactions for your business.
- Access new or better information relevant to your job. The app will present entirely new data or more up-to-date content.
- Improve workflow and efficiency. The app will focus on improving a repeatable process or task related to your work.
The next question is “how?”.
For the app developer this is a critical question to ask yourself everyday. How exactly will the app generate more business? Is your content really that much better than what already exists? Will this app really improve a process or is it just replacing one time-consuming task with another?
And the final question is “how much is it worth?”
Specifically, how much would someone be willing to invest (both time and money) to improve a tedious task. How much are they willing to pay for new business and what is your new content/data worth.
For PropStock, our app is focused on improving workflow and efficiency. As we continue to build the app we keep 3 things always top of mind:
- provide the right incentives/rewards for using the app. To us that means providing insightful analytics based on usage.
- it must be easy to use (simple obvious functions and no data entry)
- value is not conditioned upon use/participation of others.
We’re still a few weeks from an initial release but here’s a view of some of the analytics the app will provide:
After coming up with your tech start up/product idea for the commercial real estate market, one of the first questions you will ask (or be asked) is “What is the size of the US commercial real estate market?”
It’s generally accepted that the size of the US market is very very large. If you do your research and look at presentations from other CRE startups and tech companies the number you will often hear thrown around is $9 Trillion. It’s such an enormous number that it doesn’t really feel right putting it in your assumptions (let alone saying it out loud). That number is used to define the size of the industry by “asset class”. In other words, if you assumed there were 100 billion square feet of commercial space with an average value of $100 per square foot you get a $10 Trillion asset class. If you were to apply these assumptions on a global scale you come up with a gigantic number.
But is that really the size of your opportunity? Perhaps you are targeting asset management or property management. What is a conservative amount of money spent on managing these assets. Lets say the typical owner spends 3% annually on management of their property (for example, a 50,000 square foot property worth $5 million would equal $150,000 spent annually on management). That gives you a total US market size of $270 Billion. And of that 3% how much is spent on tech/IT? 1% or $1,500. The total market opportunity is now $2.7 Billion. And you expect to get 10% market share which makes your idea a $270 million dollar business. 5% would be $135 million, etc.
If your start up is going after total marketing dollars spent then you have to do a similar exercise based on vacancies and annual commissions earned as the size of your opportunity.
Once you do a top down down approach its always a good idea to validate the numbers with a bottoms up approach by looking at a single asset/property and multiplying from there.