Floored’s CEO Talks About Bringing 3-D Image Modeling to Real Estate
Injecting new technology into a long-established industry is a big enough task for most new companies. So is tying your fortune to a brand-new technology application that is still finding its place in the market.
New York-based Floored must like a good challenge—it’s trying to climb both of those mountains.
The startup’s aim is to shake up the real estate industry by layering its software for modeling physical spaces on top of 3-D scanning cameras from Mountain View, CA-based Matterport.
Floored’s service captures the interiors of properties in photographic quality for users in real estate, interior design, and other sectors. Using algorithms and manual input, the data is refined to create interactive models that can be viewed with Web browsers or an iPad. The service can be used to try out remodeling and renovations of space.
CEO David Eisenberg demoed Floored’s service alongside other startups at this week’s Enterprise Tech Meetup. “Think of Floored as a company that captures and cleans 3-D data and then sells different variants of that data to the enterprise,” he said.
He founded Floored last July while working as an entrepreneur-in-residence at venture firm Accel Partners. Last December, Floored raised a $1.1 million seed round from Lerer Ventures, Felicis Ventures, and Brooklyn Bridge Ventures. This spring, Floored was a finalist at the TechCrunch Disrupt NY competition for startups.
Early this year, Floored released its first product, which lets users explore 3-D spaces. “It’s very similar to a CAD file except it’s got photographic textures,” Eisenberg said. The company, he said, makes money by working with real estate companies to digitize property for marketing and other purposes.
Floored’s platform lets users virtually demolish walls to view space as an empty floor plate. The software also allows empty floor plates to be filled in with designs for potential construction.
During the demo, Eisenberg showed models of townhouses, offices, and restaurants including nearby Japanese restaurant Nobu, which was modeled to show how the space could be configured different ways when rented out for events.
The software lets users alter the position of the sun, turn lights on and off, move furniture, and change textures and colors in the virtual space. The service can be used by real estate brokers to help market properties, he says. “We’re trying to reduce the amount of time it takes to either lease or buy a space and take a percentage of that ROI,” Eisenberg said.
Floored plans to release products in the coming years, Eisenberg said, for such areas as building design, construction, and property management.
After demos at the event by Sailthru and customer behavior tracker Nomi, Eisenberg sat down for a fireside chat with me.
Xconomy: What really got Floored started? This is a marriage of software with hardware to solve a pain point. How did these elements converge?
David Eisenberg: I was searching for a solution to a problem that I thought was coming. I had a vague hypothesis for where the world was going. I had been the first employee for two startups that had done well. One is in the e-commerce space, Bonobos here in New York. The other is a big data company on the West Coast, TellApart. I was in e-commerce for five years and became really nervous that a lot of the big retailers were going to have trouble competing with Amazon down the line. I became interested in the hypothesis that the digitization of physical goods, vis-à-vis technologies like 3-D printing, was going to be an opportunity for companies to help enterprises fight back.
I got into 3-D scanning backwards through 3-D printing. One of the inputs to 3-D printing is 3-D models. The way you built 3-D models was by hand and I was curious if anyone out there was doing it automatically. I found a very nascent 3-D scanning industry—on the consumer end. On the enterprise side it’s been around for architectural purposes for a little while. I found a company building hardware that I wanted structure a relationship with. That was late 2011. In early 2012, I was calling senior managers at different types of companies where I thought the 3-D scanning application might make sense. I talked to folks in hospital construction, real estate management, and retailers.
Of all the things I was looking at, real estate was perhaps the largest market with the least competition and the most engaged initial audience.
X: How much handholding did you have to do to get folks in real estate to understand how this could work?
DE: We had some wind our sails. A lot of enterprises had been shaken up to the degree that mobile had rocked their businesses, in some good ways and bad. There was nothing they could do to stop the onslaught of people having these incredible computers in our pockets. They were primed to understand that technology would affect their businesses in ways that were uncomfortable for them. In real estate, with the advent of the iPhone you had a very functional camera in the hands of millions of people and that would result in pictures of property—whether the outside or inside—all over the Internet. This was something they were curious to know how they could control. When you tell them it’s not something they can control, you get some mixed reactions.
Until we had a functional visual demo, this was pretty hard. If you are doing anything that is going to be an interactive piece of software, as quickly as possible get to the demo stage. In the same way that I have very little imagination about physical spaces, I think they had very little imagination about software. It became necessary to show them what I was talking about.
X: When did you know it was time to devote more of your energy to this idea?
DE: Sometimes people get into startups to leave their corporate jobs. I encourage people to “test before you buy.” I had worked for startups for five years and had started my career at Bain & Co. in traditional big company stuff. I was pretty committed to finding something I could be passionate about.
When we closed our first deal, which was a consulting deal two months into having the idea for Floored, I remember being so giddy that someone was going to pay us for something.
X: How did you land that first customer deal?
DE: I asked every person that I knew who had some familial connection to real estate to get me started. What you find is most enterprise people are pretty bored with their jobs so if you walk in as a potentially imaginative [person] talking about something exciting, the worst-case scenario was I would entertain them for 15 to 20 minutes. You do it well enough for a few meetings in a row and sometime this begets other meetings.
X: Did you have to walk customers through different use-cases for the platform? What did you tell them this was going to change?
DE: You have to be intellectually honest about what you’ve got and what you don’t have. Often times you want to spend these sales meetings talking as little as possible. As a chatty guy that was something hard for me to grok. You’ve got to let your customers tell you what they want so you can change your sales pitch in the middle of the meeting.
We’re homing in on very consistent needs across the industry. I’m also trying to listen for where these folks spend money on what seem to be anachronistic processes.
Often times, the overlap between software teams and people who know details about enterprises is very low. We’re trying to rapidly get as knowledgeable as possible on the real estate industry. Some of the best entrepreneurs I know in enterprise tech take an advantage in the vertical space in which they are operating and then marry that to unique software talent.
X: How did you gauge the size of the potential market?
DE: We tried to do as little research as possible that would still give us enough confidence to go through with this. We asked people who were willing to share with us “How much money do you spend on X? What does that look like across all your different properties?”
These individual customers were spending tens of millions of dollars on marketing services. With 500 big developers in New York alone, we had some comfort we could build a sizeable business if we just nailed this city.
What also moved the needle on my confidence was hearing real people say “I spent $5 million on this [process] and I wish I had a tool that did that and I would spend $4 million on it.”
X: Are you focused on commercial or residential real estate?
DE: We’ve started to branch out. We’ve wanted to build a brand and sales strategy in commercial real estate. We’re dabbling in retail, residential, and non-traditional real estate like restaurants and hospitals. Part of me wants to take money from everyone who is willing to give it to us. Part of me wants to have a strategy I can hand off to someone else to run enterprise sales within a specific vertical.
X: Operating your business in New York, how do you find talent?
DE: Trying to hire software engineers is hard because the problems themselves might not be that interesting to really talented folks. If you’re going to hire A-level quality folks, you better have an A-level quality problem.
There is a certain degree to which your early team really sets the sense of quality. I personally feel most days I’m the least talented person on my team, which is super scary but also really fun.
X: What has been some of the best advice and toughest criticism that you’ve gotten when you started to seek funding?
DE: The toughest criticism was when my best friend on the other side of the table said “I’m not going to invest in your stuff.” I was surprised and a little hurt but he’s good at what he does and had lots of valid criticism. It really hit home that we did not have a perfect business. Very few that raise capital do.
The best advice I got was to talk to customers with most of your time. If you’re not selling or recruiting as a CEO—I’m not on the [tech] building side—you’re probably doing something wrong.