Carl Streck – Building a Commercial Real Estate Data and Software Company

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(2:46) – How has your thought process around raising capital changed over the years?

(5:43) – Does your mindset towards capital change when it comes to accelerating growth vs. starting growth?

(8:03) – What have you learned from peers or your own experience in finding the right investor/company fit?

(10:29) – What was your role and how did it evolve during different stages of team size in the organization?

(14:16) – As companies grow, where do you see CEOs and founders start to struggle?

(17:46) – Is there a way to build a culture that encourages feedback they might not want to share otherwise?

(21:05) – What are some of the most impactful behavioral changes you’ve made to build trust and feedback with the team?

(25:43) – When you study CEOs of larger companies, what is different about how they operate as leaders?

(28:23) – Can you walk us through how you view your product portfolio and how the two work together?

(32:40) -How do you compare SAAS businesses to Data Businesses?

(35:56) – Does your Data Analytics platform work within the platforms or software of customers?

(38:23) – How would you categorize the customers of your product?

(41:02) – Does the Analytics platform license 3rd party data sources?

(43:19) – How are you looking to design and build a data company that lasts?

(46:07) – How do you incorporate customer feedback or determine new features?

(49:09)- What’s a strongly held belief you’ve changed your mind on?

(52:24) – What’s the best business you’ve ever seen?

Alex Bridgeman: We were talking about bootstrapping versus raising capital, and you’re a bootstrap business, and I would love to hear how your thought process evolved over the years of raising capital and if there’s some change in your philosophy or if you’ve- just how you’ve thought about it over the years. I think that would be a fascinating place to start.

Carl Streck: Yeah, I mean, we started out the last recession, so in 2008. 2007, I was in a real estate business. 2008, I wasn’t in a real estate business because that’s how the recession worked. And so for the first couple years, we’re trying to figure out more or less like how do we pay the bills. I mean, some people have these like startup stories where they have some big wrong in the world they’re trying to right or some massive vision. I mean, ours in the early days was very much just like feed our families, pay the bills. And eventually, we had what became a tech enabled service that the banks and credit unions used to coordinate real estate services. But in the real early days, we were able to bootstrap because it was a service. And we had revenue right away, not a lot, but enough to pay the bills for a month or two at a time, and then we’d be broke for another month or two at a time, and then we’d pay the bills again. Definitely feast or famine in the early days. But from the first couple of years, we always would have loved to raise money. One of the negatives of starting a business during a recession, which maybe that’s what we’re going into right now, is people are a whole lot tighter with capital than they were before. And so, everybody we went to ask for money wasn’t available. And I’m also starting a business in Atlanta back in 2010. Like venture capital just wasn’t a thing. It wasn’t a thing that I knew about, at least, Atlanta being a secondary market and just the times were a little bit different. So like raising a round just was a little bit of a foreign concept. Maybe that sounds crazy to some of your listeners. But I remember going to a party around that time, I don’t know what it was, a baby shower or something. And there was a guy saying he was on his series D round. And I was like, I don’t even know what he’s talking about. Like I had to go home and Google series D, I felt so stupid. But so early on, we didn’t know what we were doing. As we began to grow and maybe crossing that 50 or so employee number, maybe 50, 75, 100, something like that, we started getting calls by private equity who were looking to invest. And it was just an interesting transition from we couldn’t get anyone to invest in the business and then we one day became attractive, and we didn’t really need the investment at that moment. And we ebbed and flowed with that mindset. We never really took any major institutional investors since the beginning, but not out of choice. I think it was out of they forced us into it early on.

Alex Bridgeman: As you’ve received offers from other- or interest from other private equity firms or growth capital, how do you think about those differently from maybe the early days of building the business versus growing the business? Does your thought process change for capital to accelerate growth versus start growth or initiate growth?

Carl Streck: Yeah, so as I mentioned, in the early days, we didn’t have, I hate to say this, but sort of visionless. We were trying to feed our families, we were trying to pay the bills, but really couldn’t see very far in front of us. As I’ve grown in my career and the company’s grown and the industry, I think the vision has begun to crystallize of the value we add to our customers, the opportunity we give to our employees, where we’re headed in the long term. And so because of that, it’s like we have a very clear and very ambitious vision for the company. So in the early days, it was like raise money just to get from today to tomorrow, which is really not a great way to raise money ideally. Today, if we were to raise money, it would be how do we get from today to five years from now. So we can really see the vision come to fruition in a shorter period of time because we’ve got a long term goal and roadmap for the company that we’ll get there one day, but we’ll get there much faster if we had a capital partner. But because we’ve been a bootstrap business, and we’re profitable, we can make some of those choices. Capital is one component. And we want to be really thoughtful that if we had a partner, that partner is the right partner culturally, they believe in the mission, the vision, the values, where we’re headed. It’s easier said than done. I mean, I like to tell folks I’ve been married 19 years, my wife and I dated for three years before that, and we’re still learning things about each other. And so, when you’re getting in business with somebody, and somebody’s investing in your company, which arguably is harder to unravel than a marriage, sadly, it’s like you might know each other for a few months. And it’s really tough to know who people really are when all you do is date for three months.

Alex Bridgeman: What have you learned from friends of yours or experts in the industry or your own experience from understanding or learning about these investors and figuring out is this person the right fit for this company or investor the right fit, and how do you kind of go about figuring that out?

Carl Streck: I think it’s hard to cut through some of the sales pitch. So everybody that’s in the investment community that’s got significant capital to invest, they’re really good at what they do. Super smart, they’re all super smart, they’re all great at sales, they’re all great at building a company, in their own different ways. And so I like to think building that relationship as time goes on is really important so you know who you’re dealing with over a longer time horizon. So, we sold 15% of the business to a mentor of mine two years ago that, practically speaking, I knew it was his money, which that was a fact. So cutting through the sales pitch, part of it is like understand the facts. So, the fact is, for him, it was his money. For a private equity firm that says they have a long term time horizon, like what are the facts? Like, how long is their fund life? Is it really forever? Or is it five or seven years? They might say they have flexible capital, but where within their time horizon do you fall versus some other source of capital? So getting beyond the sales pitch because everybody’s good at the sales pitch at that stage in their career and trying to understand practically how does their capital work? And then, the test that I have with my partner George who really could not be a better partner in the world, is when I see your number come across my caller ID, do I want to answer the phone, or do I have to answer the phone? So with an investor, you’re going to answer the phone, but envisioning yourself as do I want to talk to this person, or do I have to talk to this person? Internally with employees, we call it the canoe test. Would you be willing to spend an hour in a canoe with that person? I mean, we don’t do a lot of canoeing around here. You get the point. Just me and them, the two of us, would that be an enjoyable experience or not we think is a good test. And I think it’s a good test for investors too.

Alex Bridgeman: That is a great test. You mentioned being at certain employee levels, 50, 75, 100. I would love to know, what was your role and how did your role evolve as you started the business and grew and hit some of those growth points with your team size?

Carl Streck: So in the early days, everyone does everything. I mean, with founders on the phone, we had a Christmas party at MountainSeed last Friday. And 10 years ago, I was booking the room, I was getting the food, I was doing everything, I was decorating, I was taking down. Now, I didn’t do hardly any of that. So the practical like day to day definitely shifts from the early days well beyond holiday parties and all that stuff. In the early days, you’re just doing everything because there’s nobody else around. As the organization grows, my belief is if you build a healthy, well functioning organization, you enable and empower people to do what they can do better than you. We’ve sacrificed profits over the years to have the right people on the team so that we can scale and grow. I don’t know exactly where all those milestones were. But you definitely find yourself trending towards the things that you were uniquely created to do and giving those other things to folks that they were uniquely created to do. And in every job, we have to do things that we don’t like to do. I mean, there’s certain things in all of our days that it’s like it’s just part of the things you just have to do. But in an ideal world, you’re doing the things every day and everyone in your organization is doing the things every day that they are uniquely suited to do. And that’s definitely aspirational. But as things grow, you start to relinquish some of that if you’re, I think if you’re emotionally intelligent enough to do that. So what becomes really dangerous is if you think you should stay in a role because of your ego or pride that’s really not best suited for you but you like the title or you like where it’s going, I think that can be really dangerous. I’ve heard disputes with many founders over that specifically. Like so and so wanted to run the business, and the other founder wanted to run the business and there was like this butting of heads when, if they were really honest, one was probably better suited for it. I’m super thankful for my partner, our president Nathan, who runs the day to day of the business. He does what I could never do. And we were on a local radio show years ago. And he’s president, I’m CEO. I’m kind of the more strategic kind of outside facing person. And he’s more tactical, running the day to day of the business. And this lady who was hosting the show, at the very end, she said, “Nathan, I think you could be a CEO one day.” And it really offended him. And he was like, for a while, he was like, that’s not what I want to do. Like that- And so I think the lesson is he’s secure enough and emotionally intelligent enough that even though other people might think that you’re president, like it’s a stepping stone to another role, if you’re really in tune with yourself, you can be comfortable that this is where God uniquely created me to serve, and I’m good with that. And I don’t think many people have the same skill that Nathan has. But if you do, it just I think can lead to a better healthier organization, but also a happier self.

Alex Bridgeman: Yeah, I agree. And kind of building on that idea further, for CEOs or even yourself, as companies grow maybe beyond that 50 or 100, 200, wherever the threshold is, as companies grow, where do you see CEOs and founders start to struggle or not be best suited to run it? Like maybe they were great running a 50 person business, but once it hit 200, they started to struggle. Like for folks who do struggle, where do you see them have the most challenges?

Carl Streck: Yeah, I think holding on to things that you once di, or that you once believed. So there was a founder of a company that ended up having hundreds and hundreds of people, he held on to the Chief Marketing Officer role for a very long time. And once he brought in like a real experienced CMO, it was like the blinders were taken off. And he said, “Oh, my gosh, I can’t believe that I stayed in that role, because I thought I was the only one that could do this.” And so I think just being in tune with what am I really good at and what am I uniquely suited to do, and being okay with doing less. I think that’s one of the- one of the temptations is to be busy all the time. And if you’re not busy, you feel like you’re not adding value. And certain roles, if you’re in a more production focused role, yes, depending on the organization, you’re probably busy 90% of your day. But if you’re in a more strategic role, being comfortable with, there might be times when I feel like I’m not doing as much as I could be doing. But being comfortable in that because the value that I bring might be an idea I have on a run one day that because of my purview over the organization could make a meaningful strategic impact. But if you’re just trying to be busy and be involved, and even we, I think we call it like parachuting in. So sometimes a founder or CEO can kind of parachute into a department, like stir stuff up, confuse people, and then like get out. And that can be really confusing, what we call organizational whiplash, that I think a founder, a CEO in title and a founder particularly has to be cognizant of the fact that regardless of how you feel about yourself, the organization thinks of you differently. And a number of years ago, we were in a quarterly off site. And we had a facilitator at like a planning meeting. And I told the facilitator, I said, “I’m just one of the guys.” And he stopped the meeting and he’s like, “Carl, you’re not.” Like you might think you are, but you’re not. And the company treats you different just because of your position, and as the founder, like you’ve been around the whole time. And so, unless you’re explicit about it, people will defer to you. And if you’re not careful, if you parachute into different parts of the organization and ask questions, stir stuff up, give people- like insinuate that there was something else to work on, people will treat that as gospel when maybe it wasn’t intended to be. And so, you just have to be aware of it as a leader.

Alex Bridgeman: Is there a way to counteract some of that with a culture or a team that is comfortable giving you feedback? So you come into a department, you say I want to do these two key projects that are important to me, and perhaps your team can share back that actually these don’t work for these reasons. Do you have- do you feel like you’ve done a fairly good job of encouraging folks to give you feedback? Or where do you think folks can or founders or CEOs can encourage folks to give them that feedback?

Carl Streck: Yeah, I mean, I think creating a structure for organizational feedback has at least been our first step. I’m sure there are things that people don’t share that I wish they would. But creating that infrastructure so that every single week, there’s some sort of feedback loop throughout the organization. So, we subscribe to the EOS entrepreneur operating system kind of platform; I’m sure you’ve heard about that over the years. But what I like about it, and there’s no magic, we’ve always said there’s a billion ways to run a business, just pick one and stick to it. So EOS or Gazelle or Cable Group, they’re all probably fine, just whatever you’re going to do, don’t go to a retreat, pick a new way to run your business, come back, and then abandon that six months later because that’s really confusing to an organization. But we’ve adopted EOS for six or seven years. And what I like about the structure of it is it does promote and produce organizational clarity. So every single week, everyone in the company, from an intern to our leadership team, participates in a 90 minute meeting where you provide feedback and discovery on issues going on throughout the company. And so the goal is, again probably aspirational, but we think it’s worked for a number of years, the goal is that every single week, we’re raising and dealing with the most important issues. And I think sometimes where companies struggle is people generally are conflict averse. And we try to promote conflict, like healthy conflict. So if we live in a spirit of trust, and we’re all looking out for each other, then that conflict can be dealt with like in the spirit of the good of the organization. But having a forum that every single person can attend on a regular basis so they’re talking and raising the most important issues, we think that’s a way, not the only way, but a way to give feedback, whether it’s to me or to the leadership team. And I think every leader needs to be aware of their leader voice. And a coach that we’ve worked with for a long time, he says when a leader whispers, it sounds like a yell. And whether you like it or not, you just got to recognize it. And if you’re going to say something with a lot of passion, realize that the organization is going to hear exponentially more passion than whatever you brought to the issue.

Alex Bridgeman: What do you think have been some of your maybe most impactful behavioral changes being CEO? I imagine there’s things that you’ve figured out early on where oh, actually, if I whisper this idea or if I say an idea this way, it’s not helpful, or it’s not as productive as saying it this way or introducing things this way. Do you have a sense for ways or improvements you’ve made in your own behavior throughout the business that have helped build that trust and feedback with your team?

Carl Streck: Oh gosh, yeah. How many personal issues have I had to deal with in my own life? Lots, and continue to deal with. I think, where do I start? There’s certain things like I’m incredibly optimistic. That can be a positive, but it can be a real negative too. So learning how do I taper that optimism with realism where you’re not over promising things and you don’t think everything’s okay when it’s not. You can also- it’s an issue on the other side where everything’s bad, but it’s really not. One of our core values at MountainSeed is be a patriot, which the tagline is essentially, we’re not looking for optimists or pessimists, just patriots. So I think I probably used to see the world with exclusively rose colored glasses. And not that I’m some jaded grizzly businessperson anymore. But I think just having realism with that. There’s a great book called What Got You Here Won’t Get You There that also was impactful. It’s just like whatever got you from zero employees to 50 is not going to get you from 50 to 100. And it’s not going to get you from 100 to 200. And so, like constantly searching yourself and saying what type of leader do I need to be when my company’s three times as big. That was a challenge we gave to our leadership team a couple of years ago. It’s like we have 100 people, what type of leader will the company need when we have 500 people? Because the leader of a 500 person organization is not sitting in this room today. It’s a different version of ourself. And so, once we get to 500 people, it’s too late. So we have to create that different version of ourselves today so that when we’re there, we’re the right leader that the company needs for the good of the business. Other things are like listening more, speaking less, like making a conscious effort that, if you have something to say, as a leader, it’s back to that when you whisper, it sounds like a yell, when you have something to say, you don’t want to be overly guarded, but try not to be the first one or last one to speak. That’s just like a good rule of thumb. One strategy that that same coach gave years ago, he said, keep three coins in your pocket during a meeting. And whenever you say something, and this is like overkill, this is like behavior remediation, so nobody should do this every time. But as an exercise, if you only had three comments you could make, every time you say one, take it out of your pocket. And once you’ve used all three, you’re done. It really makes you think about the impact of what you’re saying. So there’s a lot of like kind of strategies that I’ve used to grow. Also, I mean, I’ve mentioned a coach a couple of times. I think coaching is like if you can afford to do it as a company, the benefit to you as a leader and in turn to the organization is huge. Our coach always said, you’ve got to know yourself before you can manage yourself. And a coach, just like in sports, you spend- if you’re playing football, you practice five days a week, and you only play one day a week. Well, in business, we play every day, and we practice almost never. And many people that are listening, maybe they’re not getting paid the amount of a first string quarterback in the NFL, but they might be getting paid as much as somebody on the team. And we choose to go out and play the game making mistakes over and over and over again without ever thinking about practice and coaching and all of the skills that professional athletes do to make us better players.

Alex Bridgeman: When you think of a friend, maybe a friend of yours who is the CEO of a much larger company, when you study folks like that, what sort- and you compare them to yourself, how different do they feel to you? Or what things are most different about them and how they run their companies? Or do they have coaches? Do they run meetings a certain way? Do they talk a certain way? How do they carry themselves? How strong of a sense do you have for how different your style is versus someone who runs maybe a company 2 to 3x your size?

Carl Streck: I mean, I have impostor syndrome every time I talk to some of my friends that have companies bigger than me. I mean, it’s stylistic, there’s a style piece and there’s like a in practice, how does it actually look. The style piece, I do think everyone’s got their own style. And you can’t be somebody you’re not. Because if you’re inauthentic, that gets rooted out really quickly. People can see that coming a mile away. So my style is probably different than others. But I think that’s probably less of the issue. When I see folks running like big organizations, I mean, everything that we do at MountainSeed is a byproduct of something we learned from somebody else. I’ve never really had another job, for better or worse. So, I can’t say I learned it at GE or wherever it is. We kind of learned by osmosis and being around smart people. I do think surrounding yourself with people that have gone before you is really important. Like being in peer groups, organizations that whether it’s- there’s a bunch of them; I’m in a group called YPO. And my YPO Forum has taught me more about how to be a better leader and run a business than I could ever imagine. And every time I leave our meetings, I feel like I’m woefully insufficient as a leader, but I’m motivated to be better. Some of those things are just like organizational structure and culture and striving to be the best place to work or to be the healthiest workplace, to be the fastest growing companies, all that stuff is by surrounding myself with leaders that have done way more way faster than I have, and learning from some of their successes, learning from some of their mistakes. But just like being open to learn maybe is probably one of the key pieces of it.

Alex Bridgeman: I like the YPO piece. I’ve had a couple of friends who have been in YPO, and they’ve had fantastic things to say about it. So, that’s pretty cool to hear. I realize we haven’t- So we’re half an hour in and we haven’t talked about the product yet. I would love to hear how do the- you have a marketplace product that helps due diligence with real estate professionals. And then you have a data business on the other side. Can you walk us through how you view your product portfolio and how the two work together?

Carl Streck: So the founding product was the marketplace. We help community and regional banks coordinate real estate services in conjunction with a loan closing. So think about how Uber connects a driver to a passenger. So Uber stands in the middle of that transaction. We connect local banks and credit unions to real estate services. So things like appraisals, environmental reports, surveys, property inspections, construction monitoring, whatever you need to close a loan or service a loan, you can get through our marketplace. We do that on about $100 billion of commercial properties a year for call it 10% of the banks in the country use that application. That was the core product for many years. About three years ago, we started kind of looking at the ecosystem that we’re in and the data that came through our platform that we have contractual ownership of. And taking that data or data exhaust, I think is the cool term now, taking that data that the business produces and turning that into its own product. So we launched MountainSeed Analytics a couple years ago that takes all that data and puts it into a SaaS application that can be used to do research on properties, can be used to help find lenders if you’re looking to finance a property. So a real real estate due diligence tool out of that. And I think the way the two interact, and I think a lot of people probably have this opportunity in their business whether or not they’re looking for it, is we’ve got a core business that pays the bills, grows really well, 30-40% a year, good margins. And then out of that, when we look around at the network that we sit in, it’s like what else can we do for these customers while they’re here right now? Data happens to be one that a lot of our customers purchase. So that’s a natural one. But even leveraging the other things that people within the marketplace need. So, appraisers, for instance, we have tens of thousands of appraisers that, similar to Uber drivers except different, that access our marketplace to receive assignments and bid on assignments. When we put ourselves in that appraiser’s shoes, we can say, well, what else does that appraiser do during their day? And can we help them with more of that? So one thing appraisers always do, if you’ve ever gotten your home appraised, they’ve got to do property inspection. Well, is the appraiser the best one to do that inspection? Probably the absolute best. But are they the only one? Maybe not. So the appraiser always meets the homeowner at the property. So what if we could figure out how to, through technology and video and geolocation, could we have the homeowner do their own inspection and have some sort of fraud prevention and stuff like that and the appraiser- support the appraiser in that? Yeah, I think we could probably do that. There’s a myriad of other things. So when you’re looking at your own business, somebody used the, I think it was Container Store who popularized this, I don’t know, this example, that they called it the man in the desert. So if the man in the desert walked into the Container Store, what would you give that person? Like well, I’d probably give him some water. Okay, well, that makes sense. But now they’re there. What else do you give him? Like, I don’t know, some sunscreen, like a hat, maybe a camel, I don’t know, whatever people in the desert need. And so as we think about that, it’s like that same person who walks into your store, what else do they need? And how do we leverage ourselves more into that buyers’ world? And I think there’s tons of opportunities for lots and lots of businesses to capture other sources of revenue that they’ve never even thought of.

Alex Bridgeman: You mentioned the business as a SaaS business. So how do you compare SaaS businesses to data analytics or DAS data businesses? Like, how different do you think the two are? And maybe what are some differences or similarities that you see between SaaS and data businesses?

Carl Streck: Yeah, I mean, there’s probably some SaaS folks listening that are going to tear whatever I say apart. But, I mean, I think of them sort of similar but depending on how mission critical your data is. So real estate data for our customers is mission critical. They can’t do their job without it. Similar to Salesforce or a CRM being mission critical to most organizations, you really can’t do your product or service without some of those things, or it’s pretty dramatic change. So for our data application, our customers really use it every single day. And in a similar way to the SaaS platform that fits into their workflow as a bank. It’s mission critical to their business. Now, there’s other applications and other types of data that are not as proprietary that are nice to haves not need to haves. But I think that to me, that transcends SaaS or data or anything, it’s just the way we think about it is almost synonymous.

Alex Bridgeman: One thing that folks have talked about with SaaS businesses is you can build a product and sell it forever, which is, I think, over simplifying the process. There’s always improvements that are ongoing with the product. Do you view a data software business in a similar way? Or there’s a few differences there, too?

Carl Streck: Yeah, so similar to your comment about SaaS, I mean, once you build it, you still have to keep it going, you’ve got to keep it fresh. Technology just changes so rapidly. If you’re not staying on the leading edge of it, then someone else is going to come along and provide something better, faster, cheaper, slicker, whatever. I think data for the most part, it’s a generalization, but the relevancy to the data coincides with the timeliness of the data. So if you have- Instagram is marketing ultra endurance running products to me right now because I’m training for a race. Well, 20 years from now, if they’re still marketing, I mean, God willing, I’ll still be doing ultra marathons 20 years from now, but I imagine my interests probably change over time or at least my needs. So that data gets stale. 20 years is exaggeration. But data gets stale, just like a software becomes obsolete as time goes on. So you do have to keep refreshing the relevancy of whatever product it is, which is an expensive, full time, kind of whole organization effort. It’s not just kind of build it, set it, and forget it. I mean, I guess if you’re building a lifestyle business, maybe it can work for that. But if you’re trying to build an organization that’s growing 30, 40, 100%, you’ve got to stay pretty cutting edge, whether it’s data or SaaS.

Alex Bridgeman: [inaudible 33:14] train of thought I’m trying to wrap around. I find data businesses fascinating, so I’m trying to learn all that I can about them. Does your data analytics platform, does it work within other customers’ platforms or software? Or is it a pure like analytics dashboard that they can look at and reference but doesn’t get incorporated into the other systems or workflows? Like, do you think that affects how mission critical something is if it’s a pure like analytics dashboard they can just look at versus something that gets looped into all their other systems and workflows?

Carl Streck: Yeah, I think the goal is to get it baked into to whatever their daily life is. Some folks are going to always access a tool. So just like you might look for a house using Zillow, I mean, Zillow is not going to be baked into your daily life. But it’s the go-to when you’re doing research on a personal residence or investment property to buy. There’s an application that is on demand. And then we also have licensed deals with other third parties that might use it for other sources. So we’ve got one of the biggest investment management firms in the world uses our data in their modeling and interest rate trends and capitalization rates on commercial properties and vacancy and rental rate growth. So they’re taking the data from our application, putting it into their modeling, and then coming up with their own indices for what they report out to the market, which we’re a bit blind to like how it fits into their application. But the way that we’ve thought about the data sales from either like a user that uses the portal or somebody that licenses it in bulk, like the one I just referenced, we want to make sure that we’re not competing against ourselves. So if somebody was taking our data and putting it directly into their customer facing application and selling to the same customers we sell to, probably not a good idea. But if somebody’s taking it and putting it into their own products or models or other tools they’re using, then we’ve been fine with that. But we’re also early on. So, our data business is kind of like a startup within our company for all intents and purposes. We’re still learning, trying to figure it out, not too dissimilar to you, Alex.

Alex Bridgeman: Yeah, certainly. We’re definitely in that same let’s figure it out bucket. How would you classify the different categories of customers for your data product? It sounds like there’s some enterprise level investment fund type customers who want the raw data and as much data as they can possibly get. And then others, it sounds like there’s some real estate clients who want to use it to help make decisions in their business. How do you clump different groups of customers together and organize them in terms of how you sell to them or describe the product to them and whatnot?

Carl Streck: Yes, so we think about it in there’s different verticals based on, more or less based on their profession. So, the first folks we went to because of our core business were appraisers. So appraisers are consumers of data. We also know lots of them because they’re in our marketplace application. So we first started with appraisers. We also went to banks. Banks also have been customers of ours forever. We know them well. And so, we went to banks. But then we started branching out to real estate operators, property managers, big institutional investors, private equity, investment management firms, research teams. We break them down by kind of industry code. And the pitch is slightly different and the use case is slightly different to market the product. So, an appraiser might need the data for their own analysis on an individual property, where an investment management firm might be making broader decisions on do we invest in real estate or corporate bonds. So they don’t care about the individual, but they care about the aggregated information. So the segmentation, while price is different and how they consume the information is slightly different, it’s more so the messaging. Because one thing, like you might have the best product, the prettiest product, you can think about it forever, but if you don’t know how to communicate the use case, most buyers aren’t willing to, willing or able to see your vision. And so, you’ve got to break it down for them in a way that they understand. Because you don’t have very long, at least in an initial sales presentation, you don’t have a whole lot of time to tell the story. So you got to get really good at helping them get to the end of the story without just like leaving it open ended and hoping that they figure out how they’re going to use it. You need to understand your customer and present that use case to them like pretty quickly, or else you’ve lost them. And it takes a lot of effort to go find new eyeballs.

Alex Bridgeman: Does your analytics platform utilize data sets outside of your own marketplace platform? Like do you license third party data sources to bring them in to your product to add leverage to the datasets you already have internally?

Carl Streck: No, we don’t today. At some point, we might. And this probably goes back to the bootstrap portion of our business, we can only do today what we can pay for out of cash flow. So long term, I think building our own kind of products and tools, leveraging other third party data is really interesting. Our approach, and this is maybe our culture around here, is more the kind of fail fast mentality, get products into the hands of the customer. It might not be perfect, it might be rough, but get it in their hands and let the customer give you feedback. And so what we did initially, and we’re still in this stage, is take all the data that we’ve collected from our application and give it to the customer, even if it was in its most basic format. So when we first started, it was like Excel. Not a great UX. But that was a good starting point. Because if the data is the product, then the user interface is one thing, you’ve got to have eventually a good way to consume it. But we want to see like how does the customer receive the data in its most raw format. And then we started building out the interface. So today, it’s just here’s the data. We have an application that you log into today and have searchable maps and all that stuff. But we’re not doing any analytics around it. So we’re just giving it to you and you draw your own conclusions. Eventually on the roadmap, we’ll give it to you but then we’ll also begin to build the modules where we’re drawing the conclusions that you want to have eventually. We’ll use Zillow again as an example; it started out with here’s the homes for sale, kind of like local MLS. But now I can see what my home’s worth, which is pretty cool. And they might be right, they might be wrong, but they’re pretty darn close I think most of the time. And so that’s that iteration of I’m just going to give you the data and you figure it out to now I’m going to figure it out for you and give it to you in the form that you don’t have to do any work.

Alex Bridgeman: There’s this great article by Abraham Thomas, the founder of Quandl. He talked about the economics of data businesses, which is I think probably the best article I’ve seen summarizing how data businesses work. And one thing he said was great data businesses last like forever or a really long time. He referenced Dun and Bradstreet, which four US presidents have worked for apparently, I had no idea. But he also said that, while they’re really- like great data businesses are great and last a long time, they’re also very rare and hard to find. I’d be curious, within MountainSeed, what’s your- how are you looking to design and build a data company that lasts a long time and has a durable and strengthening competitive advantage over time?

Carl Streck: Yeah, I mean, our industry is a little bit different than some others. There’s just not a whole lot of commercial real estate data platforms that exist that have proprietary data. So the nature of how we get the data, I think, is just unique in the industry and the type of data we have. So for the most part, every other data provider that exists on commercial real estate either gets their data from public records, in some form or fashion, either CMBS, which is securitized commercial mortgages, or like the county courthouse but in digital format. So they either get it from some sort of public source, or they get it by doing independent research, like calling property owners and asking them information about the property, which there’s the public sources are pretty accurate, but they’re limited. And then the survey data or calling people has accuracy issues. So if you called me and said, “Hey, Carl, how much did you lease your property for?” I may or may not tell you the right answer. I probably have some incentive to inflate the number a little bit. And I think the industry has just accepted that. So our data comes directly from the source. It’s not securitized. It’s not from like surveying data. So we think that the sustainability of our application, very much unique to our industry so I don’t know that it applies to everybody’s, there’s a differentiator there. I think what does apply to everybody is if you don’t have a differentiator, then you probably need to reconsider being in the business. So, there’s no need to recreate something that somebody else is already doing pretty well. But if you feel like you’ve got something that has demand, is unique, no one’s doing it well, like those are reasons to get in that business. But everybody else is pretty much doing something similar, then probably like keep digging around. I’m sure there’s an opportunity there, but it might not be that one.

Alex Bridgeman: Yeah, that makes a lot of sense. Craig Fuller, we had him on the podcast talking about FreightWaves and building their data business. One thing he said that was really interesting was they had these initial couple of data modules that were trucking transactions and effectively the latest pricing on different routes. And one thing he realized was over time that they kept adding data modules, over time they got up to I think 170 data modules. And customers, by and large, still used the same kind of three to four existing original data modules within the business and didn’t really branch outside. So when you think about your own business and adding data or new features or whatnot, how do you incorporate customer feedback? And beyond just customer feedback, but what they actually do? Like they’ll say they will use something, but are they actually using it? How do you figure that out to determine what the best next feature or next data set or product might be?

Carl Streck: I mean, somebody in your company has to be focused on customer feedback, like either somebody that- either a product manager, yourself, like somebody needs to be giving that same feedback loop from customers, because if you lose touch with your customers and what they like, you end up with like a whole bunch of waste, stuff being built that doesn’t need to be built. Brian Hamilton was the founder of a company called Sageworks in the banking industry. He sold to KKR a couple years ago and has another startup now, but really successful entrepreneur. Years ago, I was in his office, and there were all these big companies that were like saying they wanted to buy us, but then they were going to put us out of business. And I was scared. And I was like, Brian, we got to raise money, or we got to sell or something, because all these big companies, like we’re tiny, and they’re big. And he was like, “Carl, my whole career, people have been telling me that they’re going to put me out of business. And it never happened.” Because the vast majority of people won’t stay close to the customer. I mean, the title of your podcast, they don’t think like an owner. And you stay close to the customer, and they’re not going to beat you. And short of some sort of fundamental shift in the business model or whatever, I think that’s held true for us, that if we continue to be close to our customer, to listen to their feedback, before we do things, let’s talk to them, good and bad, and be curious, I think that’s half the battle in product management. But it’s something that I think you lose sight of. And as the organization grows, I think I’ve been guilty of it, that I get further and further away from the customer. And then potentially, I could build things that I think are cool, but the customer sees no value in. And that’s not good. And I’m sure I’ve done that.

Alex Bridgeman: Yeah, it’s definitely an important skill to master to make sure you’re using that feedback. Moving into closing questions. My first one to you is what’s a strongly held belief that you’ve changed your mind on?

Carl Streck: So I think I told you before we got on the line that people in the company, I like to say endearingly, say that I have strong opinions that are weakly held. So I have lots of strong beliefs, but I’m willing to abandon them for better information. I mean, the biggest one that comes to mind is not necessarily business, but I think it applies. I had a path for my life that I believed I was on, which is you graduate college, you get a job, you get married, you have kids, they go off to college, you retire, and you sail off into the sunset. But in 2012, we had a four year old, a two year old, and a six month old, and we met a little boy who was in foster care. He was born in August. We met him in September of 2012. And he was born with a severe, with severe brain damage, with lack of more detailed description. And my wife looked at me and said, “This is our child.” And I looked at her like, you’re freaking crazy. And because at that moment, it was like my plan for my life was this kind of American dream, did not include a child with special needs that would be in our care for the rest of our life or his life. And so, two weeks later, I think God totally changed my worldview and my heart on that through another kind of traumatic situation. It was like, you can have a path for your life, but lots of people have plans that get upended. And so, you just can’t plan your whole life. You make the right decision with the information you got at the movement you’re in and kind of let the chips fall where they do. And so, we met Isaiah, Isaiah is his name, we met Isaiah in September of 2012. We adopted him in December. And like that path for our life totally changed and created a fullness and richness that I could have never imagined. We went on to adopt more children and fostered a bunch of kids. And so that strongly held belief, I think the point is, whatever path you think you’re on, like I just encourage folks and myself on a regular basis to like reevaluate why is that my plan. Like with Isaiah, my belief for my path for my life was, for the most part, rooted in my own selfishness. And once that kind of came off the table, there became- I became open, and my wife was way better than me because she was open in the beginning, but became open for whatever might come our way. And so I think that was a pretty strongly held belief that changed, but it applies to our personal life in a dramatic way but business as well.

Alex Bridgeman: Yeah, that’s a great story, and it definitely applies everywhere, keeping beliefs and plans loosely held. I think that’s a good framing of it. What’s the best business you’ve ever seen?

Carl Streck: So there’s probably like two answers. One is like the best business model or the business model I admire most. Calendly is probably one of the best I’ve ever seen from a business model. It happens to be in Atlanta founder, which real proud to represent Atlanta. But very few businesses have this like extremely viral ability to market. So, when one person signs up for Calendly, they send out their Calendly link to all their contacts when they’re looking to book a meeting. And then they see it and they sign up. And what other businesses grow at, I don’t know, hundreds of percent a year at massive scale? So I think that’s remarkable. And Tope is a great founder that has done it right here in Atlanta and really around the world at this point. Now, that’s on the business model side. I’m a huge fan of Casey Crawford and Movement Mortgage, if you’re familiar with them, from a- they’ve grown at massive scale, but they really treat their employees and their community with more care than I could ever imagine. Taking the profits from the business and building local schools, doing vision trips around the world with their employees, going to do service projects in some of the remote places all over. I think that they have really figured out something to shepherd their people in a really, really unique way, at a massive scale, thousands of employees. So that’s one that I definitely admire.

Alex Bridgeman: It’s a great one. Those are both good ones. I use Calendly myself and really enjoy it.

Carl Streck: Yeah, I was going to call you out, but then I thought maybe you uses a competitor. So I had to-

Alex Bridgeman: No, I definitely use them. I did see Gmail actually came out with a calendar booking function. So I’m going to evaluate that to see if that’s comparable. Although Calendly has many, many years of product development, so it might not be there quite yet.

Carl Streck: I’m sure the Gmail one is way worse. Gmail way worse.

Alex Bridgeman: And I’m sure it’ll eventually get- if it doesn’t work, it’ll get cut eventually, I’m sure, if the product doesn’t work. Google has a fun history of deleting products and removing them entirely. So I would not be surprised to see the calendar function go that same way. But yeah, thank you, Carl, so much for sharing your time on the podcast. I love talking about data businesses and hearing about yours and how you bootstrapped it and all these other stories in between. It’s been fun to chat with you.

Carl Streck: Awesome. Thanks for having me.