Theo K. Browne: FinTech & The Built World Economy

As you know, Fifth Wall’s portfolio event was this week in Venice. There were three panels held yesterday at their office, each covering a category Fifth Wall has made big bets on (the majority of panelists were from portfolio companies):

Future of Cities
Real Estate-as-a-Service
Fintech and The Built World Economy

I’ll start with a few thoughts on 3rd panel, FinTech and The Built World Economy (the other two will come next week):

A look at how fintech has disrupted almost every sector of the real estate industry, where it falls short and how it’s expected to evolve. This panel also looked at how blockchain technology is poised to transform the commercial real estate environment.>

Moderated by Jonathan Shieber from TechCrunch.

Max Simkoff, Founder and CEO of States Title
Erin Collard, CFO and Founder of Blend
Assaf Wand, Co-founder and CEO of Hippo
Josh Stein, President and General Counsel, Harbor

Going into the panel, I knew a fair amount about Blend, Hippo, and Harbor and virtually nothing about States Title. Max was a lively personality, and got a few laughs when he said the attraction to founding a title company was because he realized the title industry (as it stands today) is a scam. Today’s title products are not based on risk, but based on home value. States Title is making a process that formerly took 7 days instantaneous.

Erin at Blend is building an amazing SaaS tech-enabled mortgage business, and part of Fifth Wall’s investment was brokering a deal with Lennar (the largest homebuilder in the US). Regulatory risk isn’t a bad thing for his business, as it acts as a moat to competition in mortgage (not unlike how the challenges obtaining MLS data act as a moat to those who have spent the money and time to aggregate hundreds of MLS’). He believes a major area of opportunity is to strengthen the realtor – loan officer relationship. Especially in markets where homes sell in a couple days, if that relationship is not rock solid, there’s little chance a buyer will be able to win a bidding war and close on a property.

Assad at tech-enabled home insurance broker Hippo mentioned something that really resonated with me given my passion for consumer advocacy is the insurance industry has historically been focused on improving efficiency, but refocusing on the customer is the way to transform the experience. He spent a few minutes outlining the opportunity for home insurance to be much more proactive – monitoring roofs with drones, cleaning gutters, changing water filters, monitoring for leaks, etc – in order to provide more value to the homeowner, and de-risk Hippo’s business in the process.

Josh at Harbor talked about Harbor’s mission to bring the liquidity of public markets to private securities. Real estate happens to be the world’s largest class of private securities. Making trades faster, cheaper, and easier (using blockchain technology) will lead to more liquidity — while remaining compliant with rules and regulations specific to each investment. On the topic of regulation, a mistake made in crytpo was viewing regulatory hurdles as an impediment. Instead, they should (and Harbor does) view the SEC (& other regulatory bodies) as your largest and most important client. He’s bullish on Harbor’s ability to enable un-boundling of ownership interests, and re-bundle them. Even though I hear “blockchain” from all corners of this industry, Harbor is one of the very few blockchain technology investments that makes sense to me (see Fifth Wall’s announcement from a few months ago here). While they are certainly focused on real estate for their early adoption, they are also thinking about hedge funds as a category long term.

While it’s true municipalities across the U.S. are experimenting with blockchain for various uses like reimagining land registries (and there are some startups trying to help them do so), Max hit the nail on the head when he mentioned the need to sell into 3,000 country recording offices being a huge (massive) barrier. Having dealt a bit with county recorders and assessors in Zillow’s early years, I certainly agree that trying to sell software to county recorders offices does not sound like a fun (or lucrative) business.

The panel takeaway in my mind is that the mortgage process truly is a colonoscopy of finance. Consumers give literally everything financially to whoever is doing their mortgage; iIt’s extremely intrusive. As a result, it’s a great place to add other financial services into the equation. A financial wallet (available to be used by any person or entity who needs your financial data) is the major consumer win lurking for someone to capitalize on.

Disclosure: Fifth Wall is a client.

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