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REAL Trending Special Edition: Technology Trends

Oct 16, 2020 9:21:55 AM

Eric Stegemann, CEO of Tribus

With the Pandemic came faster technology innovation and more adoption, Eric Stegemann talks about some of those trends and more in this informative discussion on real estate technology trends.

 

Want to learn from the brightest minds in real estate? Then you'll love our REAL Trending special edition podcasts. Editor in chief of content, Tracy Velt, interviews brokerage leaders, top agents, and teams, and industry experts on leadership, recruiting, marketing and more. Subscribe today at realtrendsinc.podbean.com.

Tracey Velt:

This is your host, Tracy Velt, editor of content for REAL Trends. Today we're speaking with Eric Stegemann, CEO of Tribus, a consulting and technology company offering custom real estate brokerage platforms. In 2004, he created River City Real Estate, which quickly became the largest independent brokerage in the Saint Louis area.

There, he oversaw the development of numerous real estate technology breakthroughs that were well ahead of their time. The intellectual property developed at the company eventually became the framework for a new technology firm, Tribus. So welcome, Eric.

Eric Stegemann:

Thanks so much for having me, Tracy. I appreciate the invite.

Tracey Velt:

Yeah. I want to start out with, obviously COVID's really impacting the way people are doing, real estate professionals in particular, are doing business. And it's been so important for them to have technology, different types of technology through the COVID-19 restrictions. So tell me a little bit about how that's impacted Tribus.

Eric Stegemann:

Well, if anything, it moved demand forward, and I think that's probably the biggest thing in our space, is I think many brokers woke up and said, "Hey, we're having some down time that we wouldn't normally have this time of year, and we're going to need to come out of this strong with good technology that allows us to sell real estate less reliant on being or coming into an office.

And so what's out there that can help us with that?" And so in the March timeframe, the spring timeframe, we normally don't sell or communicate with very many brokers at all. In fact, what actually generally happens is that most of the business that we have is done from August through December because brokers are obviously less involved in the day to day transactions that are going on as the business slows down for the year.

Eric Stegemann:

But for this year, all of a sudden in March, our phones started ringing of the hook, and so it's been a pretty good year as far as that goes. But I think it's more about demand moving forward rather than new demand that was out there.

Tracey Velt:

Okay. And have you found that you're developing, or you have a need to develop new programs and products a little quicker than you had planned?

Eric Stegemann:

Well, I think one of Tribus' strong suits is we move very, very quickly. We've been kind of the creators of many technologies that are out there that you see elsewhere, and so we kind of pride ourselves on being the nimble company, and always having been the nimble company.

And so I would say it hasn't changed as far as what we're seeking to do, which is to constantly be ahead of the curve and put our brokerage clients two to five years ahead of the curve of what everybody else is doing in most cases. I think the only thing that changed really is that brokers woke up, and things that would've been adopted in two to five years from now, they're starting to ask for immediately, and saying, "Hey, can't we have something like this right now?"

Eric Stegemann:

So I'm pretty proud of our team. We're a pretty nimble group. And there were certainly some requests that came in, for example, like virtual tour, enabling to do a completely virtual open house and connecting up with other tools out there that did that, like Zoom, et cetera.

Those were quick turn it around in a week type things. But other than that, we've been staying with blinders on to what everybody else is doing and just trying to execute on what works well for us, which is keeping brokers ahead of the curve.

Tracey Velt:

Yeah. Well, that's great to hear. In terms of technology, so what do you see brokers and real estate professionals really struggling with today?

Eric Stegemann:

I think what you're seeing is a dichotomy of the industry as a whole. And I think what you're finding if you look at some of the numbers is that brokers that were executing well before the pandemic have executed even better during, or after, or going towards hopefully the end of this time.

And the brokers that weren't executing well, or had lots of agents on their roster that didn't sell very much, I think you're going to find when you guys put out your list next year, I think you're going to find that the best executing brokers have really risen to the top, the cream rose, during this time. And so as far as technology goes, I think it's a perfect example of that is the brokers that were using technology to differentiate themselves and not to just be a checkbox item, they've really risen to the top.

Eric Stegemann:

And agents that are productive have seeked out those brokerages to move their licenses to, whereas the brokerages that hadn't been paying attention to technology, or using it what I call as a checkbox item, meaning, hey, we've got websites, but nobody uses them. Or hey, we have a CRM, but nobody uses it.

Those types of things that just say we've got it to recruit to or to retain agents to, I think those ones have really fallen behind because they don't have a good tech strategy in place. But I think the brokers that were already executing well already had tech in place. I think they're executing at an even higher level and being even more productive with the people they have, agents and staff, now going into the pandemic.

Tracey Velt:

Yeah. The pandemic has definitely forced brokers to take a look at what they're doing and maybe finally have the time to really change some things, so that's interesting. What do you find differentiates Tribus from its competitors?

Eric Stegemann:

There's a few things. The thing that I'm most proud of that we tell this story a lot because I think it's so vital to who we are is Tribus is not funded. We have no debt. We answer to nobody outside of the company. The only people we answer to at the end of the day are our clients.

And so every one of our competitors pretty much either has debt on the books or most of them have big outside funding from non real estate private equity and investment firms. And so our two biggest competitors, they're over 51% owned by outside what I call dumb money, meaning it's not money, investment money that people know the business. It's people saying, "Hey, there's a million realtors out there. Let's go make some money."

Eric Stegemann:

And when they step into this space, they step on all sorts of landmines, and they really irritate customers. Most importantly, they accept deals that they're just getting to keep that hockey stick growth going to support the $20, $30, $40 million of funding they raised. And Tribus has zero debt, zero outside investment.

We literally answer to our clients. And what that helps us do is take a long-term approach, a long-term vision to working with our customers. And where the average in the industry is that a client sticks with a broker software vendor for only between four and five years, and most of the agreements in the space are only about three years. That means most people aren't even renewing one full time.

Eric Stegemann:

Our clients tend to stick around a lot longer. We engrain ourselves with those clients. And we try to actually help them do more business rather than just be that checkbox item. And sometimes that means building them completely custom websites. Sometimes it's preventing them from hitting brick walls with their technology.

And sometimes it's just being an ear for them to talk to and figure out. What should you be doing right now? But we try to really engrain ourselves to our clients and create those long lasting relationships.

Tracey Velt:

Now let's take a quick break to hear some exciting news from REAL Trends and our sponsors.

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Tracey Velt:

Now back to our podcast. Obviously, you have a background in real estate. So how has that impacted you as far as running a technology, a real estate technology firm? And what do you see as your greatest challenges?

Eric Stegemann:

I think it's all the difference in the world. You're asking a question of what differentiates us, and I didn't want to drone on about Tribus too, too much there, but another thing I'm really proud of at Tribus is our entire executive team has sold real estate and been in the brokerage business before. So everybody in a leadership position at this company has literally put signs in yards.

Our VP of product is a second generation realtor. Our head of software development, which nobody ever believes me on this one, but I swear, folks, he was an agent and started building tech to run himself as an agent and inside of the brokerage he worked with, and just decided to focus on the tech side of things. And here he is 10 years later, but he obviously knows the business.

Eric Stegemann:

Our director of broker services, she was one of the youngest Re Max regional managers ever, and then focused on kind of the accounting side of things after that. So when it comes to that, our team really understands the business. And myself included, this will be going into my 21st year in the business and having owned and operated one of the largest independent brokerages in the area that I came from.

I think it's all the difference in the world because you know what brokers need and you know the right questions to ask to figure out what they really need, as opposed to just sticking stuff out there or copying kind of the other companies that are out there in the space. And so when our team talks to a broker, I think we come at it from more of a consultative approach and having been in their shoes, rather than just a technology provider.

Eric Stegemann:

You asked what the greatest challenge in our business is. And I think that is having brokers block the time needed to have successful long-term implementation of technology. They're so used to having just tech as a checkbox item for them, that when we step in and say, "Hey, it can be really more."

Post launch or leading up to launch, it's really getting them to understand this is more than just a checkbox item. And if you're going to work with us, this is going to be an investment, and it's going to be something that's going to yield you some returns if you give it a shot.

Eric Stegemann:

And so I think that's the biggest challenge, is changing that mindset that brokers have had for since day one of technology hitting the real estate industry, of it's not just there as another thing that they have. It is a foundational piece of the business.

And it's there not to take over their lives, but to help bridge that connection from a digital landscape, where a consumer may start their search or start their communication with an agent. And it's really there to bridge and help them better communicate with their customers. And once we get in that mindset, the major challenges we have at Tribus really, really go away.

Tracey Velt:

Okay. Great. So we talked about challenges. So where do you see the most opportunity in real estate brokerage?

Eric Stegemann:

I think for those brokers that are executing at a high level, I think there's a lot of opportunity in this space. I think it asked Steve Murray, your CEO, I asked him the question, and he once told me that over 60% of brokerages are either for sale publicly or privately, or they will be for sale in the next few years. And if you're a high performing brokerage leader, and you want to be in the space for more than the next few years, I think there's a huge opportunity in the consolidation of the space.

And so if I'm a broker, if I'm somebody who wants to invest in the space and be here for a while, I'm out there looking at these acquisition opportunities. I'm out there looking at the companies that are owned and operated by company leaders that may not want to be in the business in five years from now.

Eric Stegemann:

They may want to retire. Or they maybe not have somebody to hand the business off to for a next generation. Or the business has just had challenges with COVID, or for whatever reason.

And they've got decent agents that are at the company, but maybe the company operations aren't as good as what they probably should be. And so I would be talking, if I'm one of these higher performing leaders, I would be wanting to talk to those types of folks, and figure out if there's ways to roll up together.

Eric Stegemann:

And a really good example of that happens to be one of our clients, Corcoran Global Living, they've already done I think five acquisitions. And they've got four or five more that are on the table for them to do within the next few months.

So they're seeing and executing on that opportunity. And that's just one example. We have a few other clients that are doing the exact same thing right now.

Tracey Velt:

Yeah. It's a great time to buy a brokerage right now. So I know Steve's got several for sale, so it's a great time.

Eric Stegemann:

It is a great time. And I think there are opportunities that don't always mean somebody needs to leave the business. It may be that they become a partner in a new larger entity, and reduce some of their expenses because they're now part of this larger entity. So it doesn't necessarily mean walking away from the business.

Maybe it just means consolidating with a larger entity and giving you more power to go and compete. And so Steve's obviously at the forefront of that space. And there's nobody with more experience in that than what he has. And I'm sure he could talk more to the specific numbers. But yeah, I was astounded a few years ago at a Gathering of Eagles event when he told me that 60% to 65% I think of brokerages are for sale either publicly, privately, or will be within the next few years.

Tracey Velt:

Yeah. It's definitely an interesting factoid. My last question is really, technology has always changed quickly, and the pandemic has brought about even faster innovation. So what are some trends that you're seeing in the real estate industry? And how are they impacting your company?

I mean, obviously we talked a little bit about the fact that you are already ahead of the curve with technology. But I'd like to know some of the trends you're seeing coming down the pike.

Eric Stegemann:

Well, I think one of the more interesting things that's going on in our space right now is that there was this big push a couple years ago to move from an all in one approach, which is what most broker software vendors had taken, to more of an integration approach or a best of breed approach.

And I think what happened with that, and by the way, Tribus has been on the forefront. In fact, one of the reasons Tribus was started was because at my brokerage, we couldn't get any of our software vendors to work with each other. They had closed off walled garden systems, and so we had to build our own middleware layers to make things work together.

Eric Stegemann:

And so we've been big proponent of having open APIs and open connections to work with other companies that are out there. But I think what happened in the space is that the promise of that kind of was not followed through with. So when you have integration partners, we have over 100 integration partners at Tribus.

And I'm not talking about just single sign on, a lot of our competitors say we have 20 integrations, 30 integrations. Most of them are just single sign on. At Tribus, we have real native integration. But the problem is when you connect up that data, I think there was this expectation that from an agent perspective, it was going to create this very seamless approach to managing their business, and that they could click one button and one system, and it would do everything that they needed to do.

Eric Stegemann:

And the reality of that is I think getting any vendor in our space to really execute on that kind of a vision is difficult because everybody, all these other vendors, want you to come into their system and use their product from a visual standpoint because they realize if they don't have you logging into it, you're probably going to leave and go to another vendor because there's ... Or this whatever, one thing is that you want to do, they're a dime a dozen.

And so this other product does this thing that I need it to do. And so I can flip flop out in three years from now, or two years from now, and go to that other vendor. So they want you logging in to have that agent capture rate or that agent adoption rate.

Eric Stegemann:

And so they don't always provide every connection possible, or don't always make it possible to log into a system like Tribus and do the things that the agent needs to do in a simple way. And so what I think we've seen is a swing back to the all in one approach, where there isn't open connection, but the broker platform vendor is going to execute on the main things that an agent needs to do.

But we work with vendors that are out there, By Side, or Home Bot, or some of these other ancillary service companies that can do other things that Tribus is not executing on a daily basis on, and still have that connected in there. But maybe there needs to be in one system for CRM, and you shouldn't have a CRM tool at the brokerage that's separate from your website, which is separate from your email marketing system.

Eric Stegemann:

I think that promise, most brokers have realized is not ... It's beyond the capabilities of what the vendors are willing to do at this point. So that would be the biggest thing I think I've seen, is the shift back towards good broker platform vendors that can execute on multi facets of running that brokerage and all the tech they need in one place to make the agent's life very easy.

Tracey Velt:

Oh, yeah. That's an interesting take on everything that's happening right now too, so thank you for that. And we really appreciate you taking the time to speak with REAL Trends for our REAL Trending Podcast.

Eric Stegemann:

Absolutely my pleasure. Thank you so much for having me on. I appreciate the questions. And all those listeners out there, I just encourage you to work on execution. That's the biggest difference I see between the best brokers and the mediocre ones, is execute, execute, execute.

Tracey Velt:

Yeah. Well, thank you. And best of luck to you and Tribus as we move forward through this challenging market right now, so a good market, but challenging.

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