Dave Marcinkowski is a Founder/Partner in Madera Residential and Quext, focused on creating smarter, healthier apartment communities.
There are multiple stories about well-positioned, influential people buying their way to the top of Mount Everest, and many of them don’t end well. Without guidance from knowledgeable climbers who know the mountain top-to-bottom, attempting to scale it without proper tools and preparation can end in disaster. At the same time, however, those who have the knowledge to climb the mountain don’t always have the funds necessary to support a safe expedition.
Equating economic positioning with veto power pervades many industries, including one I know well. In multifamily property management, legacy groups perpetuate monolithic systems that I believe have held the industry back for decades. But what if there’s room at the top of the mountain for everyone—the smaller tech providers who live, eat and breathe innovation and the legacy providers whose sheer size and influence are needed to set even greater innovation in motion?
At An Impasse
To the growing dismay of operators—and, indirectly, the residents—property management applications (proptech) providers have been slow to innovate. Billing, maintenance and other functions still run on antiquated legacy applications with disjointed interfaces that rely heavily on manual entry. Such “solutions” perpetuate an industry with systems prone to error, interruptions, lackluster customer service and wasted energy.
Many startups are solving pieces of the puzzle and injecting innovation to improve operations in multifamily property management. Typically, each tech disruptor provides a novel solution to one business domain (say, self-show), and they perform that function well. Instead of offering an all-in-one solution, these innovators create an assortment of components companies can combine and tailor to their unique needs—at least, in theory.
However, many of these smaller proptech companies get bought by the giant players who dominate the space. From what I have seen in the industry, this often leads to startups’ solutions getting choked out by the outdated software that typifies many of these organizations, and no real change occurs. Even those innovative startups that aren’t bought up typically find themselves in a less-than-ideal position. Alone, they don’t form a complete proptech solution, yet they can’t interoperate with the big players’ solutions because the latter don’t have or adhere to standardized interfaces or database formats. Plus, changing a startup’s products to integrate effectively with these older applications and databases is typically cost-prohibitive.
With the oncoming tech avalanche that is likely to transform the housing industry in the near future, I believe this pattern is no longer sustainable. Legacy and startup proptech players must come together and learn how to work together if we want to not only survive the changes but also thrive as an industry.
Proptech Innovation: The Avalanche Ahead
Even without a clear, consolidative solution, the technology revolution in proptech may soon reach critical mass. When this happens, how gracefully any piece of the puzzle—big and legacy or small and innovative—interacts with the others will likely depend on the choices made now, when the multifamily housing industry is booming.
How can the pieces play together, allowing everyone to keep their footing as the revolution surges forward and upward over the next decade or so? Like the preparatory phase for a mountaineering expedition involves climbers of all types and levels, I believe this will require standardizing processes, opening conversation and sharing resources among all proptech companies—legacy giants, newbies and everyone in between.
How Monoliths And Disruptors Can Work Together
Summiting a mountain is costly. It’s no wonder extreme expeditions are often on the bucket list for those in solid financial situations. Yet all the money in the world is useless without a knowledgeable guide to point you in the right direction. The climber needs someone who understands and can anticipate the conditions of the mountain on any given day, and they need to collaborate effectively with other decision-makers in the expedition.
In proptech, the smaller disruptors are often those who recognize the shifting technology landscape better than anyone else. They can be the “mountain guides” with the vision needed to see (and risk) the path to the next level or plateau. But without the necessary finances and data to get things rolling, these startups remain stranded at the base of the mountain. With this in mind, I recommend the following as first steps in successfully summiting the technological mountain range ahead.
1. Enter into dialogue to define standards for the industry.
Both the startups and the large vendors can do more to create opportunities for meeting and exchanging ideas with each other about how to move forward in a manner that engages the best elements of what both have to offer—while also carving out a new pathway that is unique to the combined solution they create together. Whether it’s on LinkedIn, at an industry expo or over a business lunch, sometimes just getting the conversation started makes all the difference in enacting change.
2. Be open to sharing resources.
By sharing data models, interfaces and other resources of legacy systems, large vendors can help pave the way for new applications to access and exchange data with old ones. This can be done by providing application programming interfaces (APIs) to allow others to read and write data in a nonproprietary format without upsetting the underlying database.
3. Combine monoliths and microservices.
Another option is to wrap proptech monoliths in microservices to provide access to their functionality, not just their data. This can be a timely process but should ultimately allow for greater scalability for the monoliths, as well as higher rates of implementation for the smaller proptech players.
‘In essentials, unity.’
When it comes to survival, innovation must take precedence. Providers of proptech software (and hardware) that don’t align themselves with this reality may fall behind and disappear as their more agile peers race ahead.
Thankfully, there is room for everyone at the top. With an industrywide push for updated standards and bold thinking, I believe both the established monolith providers and the innovative new applications can come together to cooperate, interoperate and extend the functionality of their solutions.
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