Podcast Episode ft. Dom Beveridge of 20for20

Podcast Episode ft. Dom Beveridge of 20for20

Annual report on Multifamily Tech

Show Notes


Dom Beveridge - 20for20

Special mentions


(Disclaimer: Please be advised that this transcript may contain unintentionally confusing, inaccurate, and/or amusing transcription errors.)


Matt Knight: Hey guys, Matt here. Another episode of our podcast. This time we have Dom Beveridge who does this report every year called 20for20. It's a really cool look at sort of what the sentiment is in multifamily tech and what some of the themes are and maybe more importantly are not. Coming forward and multifamily tech specifically.

So I don't want to steal his thunder we got into some cool stuff here about things that will be happening and are sort of keeping multifamily execs up at night in terms of technology and innovation. So check this out. It's short and sweet, but you can check out his report. We'll put a link to that in the show notes.

If you missed it from a couple of weeks ago. So enjoy this few minutes here with Dom and 20for20.

Matt Knight: All right, Dom, thanks for being here, man. Excited [00:01:00] to learn more and hear about what you're publishing. We want to dig into the publication in a second, but if you don't mind, just who are you? What, how did you get to this place? And then we can get into what the report is for that.

Dom Beveridge: Yeah. Well, so Dom Beveridge, I've been around the multifamily industry for a little over 10 years. For most of my career, I've been a consultant like either for big five consulting or for Yeah, for for technology companies. It might my sort of path in multifamily. I came into the industry via revenue management, but I've worked extensively in various different industries doing sort of pricing analytics and that kind of thing.

So my first call in multifamily was revenue management and I became a CMO for a technology company. I, that company was sold to RealPage. I spent some time with RealPage before going back into consulting. And just because I just got this combination of having pretty deep expertise in technology in B2B marketing and in consulting.

I just found that tech [00:02:00] companies were coming to me to ask them to advise them on things like market engagement, go to market stuff, and also to write content for them. So eventually it got to the point where , I just started my own company 20for20.

The name comes from a publication that's that we had been working on for with my previous employer for a couple of years. And yeah, that's basically what I do. I study stuff about technology and how people evaluate and buy it. And I write content that helps people to understand, I hope things a little bit better and in particular things that they might be thinking about the wrong way.

Matt Knight: Got it. So tell me about the report You mentioned it's 20for20, how long have you been doing it? Who does it go to? Like, give us some of the details on it.

Dom Beveridge: Yeah, so the first ever edition came out at the beginning of 2019.

The idea then, it was just something that we were doing at NMHC OPTECH. We just decided to, you know, why don't we just interview some people and try and find out what they're up to and what they're planning to do for the next year and we can write the results off of some kind [00:03:00] of a paper.

And then once we sort of got into these conversations and we started to realize the stuff that people were telling us, we just thought, okay, this is actually really interesting. We then put a lot more effort into making it quite a professional publication. It did way better than we expected.

In particular it would just attract like hundreds of Of sort of VP and up level people, lots of C suite people would would read this document. We then started hearing that people were sharing it around their organization. So we sort of knew that this thing had this reach. And so we just kept at it.

The sponsors then came on board and so it became a self financing thing as well. And yeah, it now just has its own its own following and it's, it's a big kind of part of the industry conversation each year.

Matt Knight: And if I read it correctly, it's, it's a set of questions that are standardized to 10 different multifamily executives on current trends in tech.

Is that correct?

Dom Beveridge: Always 20, but yes, it's. basically the [00:04:00] way the research works, I'll get with a different group of people, like some functional leads, some VCs, some people like that, to just have very open conversations about how they see the industry right now. We boil that down into a script for a 30 minute deep dive conversation.

We then have that same conversation with 10 COOs and 10 heads of technology. And they're all from different companies. You know, you've got big fee managers, you've got public reads, you've got 5, 000 unit owner operators. Always, always operators. And that gives you enough variety and, and enough consistency that you can actually start to understand what constitutes a trend in the industry.

And obviously, because we've now been doing this for a few years. You get to develop more and more of a year over year perspective that kind of gives us a good steer on what's going on.

Matt Knight: Got it. And so this is, if I hear it right, it's sort of from knowledgeable, a variety of knowledgeable executives and it's [00:05:00] used by another group of knowledgeable executives to sort of determine which way the wind is blowing in multifamily tech.

 Is that close?

Dom Beveridge: Yeah, that's a good, that's a good way to describe it.

Matt Knight: Perfect. And so I know we're gonna link to this as people sort of look at it after the fact, after they listen to your wonderful, buttery accent. But I think the part we can sort of focus on, if you wanna tell us the structure, I'd love to hear that.

But I think the conclusions are probably where we should spend most of our time, unless you disagree.

Dom Beveridge: No, the conclusions I mean they're the hottest takes as it were.

Matt Knight: That's why it's just clickbait hot takes. I like it. What's if you don't mind just quickly, maybe for context, if no one's read this, like what are the types of questions and then what are the expected outputs you get, and then we can sort of jump to the conclusions you draw from that.

Dom Beveridge: Yeah. Well, so there are broadly sort of three sets of stuff that we, do we ask people about, we, we ask them about what were the highlights of the year that just ended because The interviews take place [00:06:00] right before the end of the year. So we asked them about what were the highlights of 2023, you know, with an obvious skew towards operations and technology, we asked them about the year ahead, you know how do they feel about the year ahead?

What are the big things they're trying to get done? Biggest priorities what's going to be the most different about 2024, like the year ahead. So just this general outlook temperature check kind of thing is one part of this. We've gone deep on centralization. Each of the last three years, we've gone deeper and deeper into the topic of how people are changing their operating models.

That is so obviously like a salient topic. It's something that most companies are at some stage of working on at the moment. So it makes sense to you. Each year we sort of ask more questions that try to get deeper into that topic, which we've done this year. And then we've asked general questions about technology.

So there's some areas of technology where we know that people are. So we, I think we focus this year on, on obviously AI adoption was a big [00:07:00] thing. We wanted to know about how people are buying technology, evaluating buying technology, because , just given the interest rate environment and the focus on the performance, how much you're spending on technology and where you're investing your dollars is more under the microscope than it has been previously.

So we wanted to get into that. And some other areas, connected communities, revenue management, and short term rentals were areas that we know have quite a high salience right now. So yeah, the third major chunk is just generally the technology outlook, the technology adoption outlook across these platforms.

Matt Knight: And just before we move into the key findings, define for me what you think of when you hear centralization in this context.

Dom Beveridge: Yeah, it's a good question. It doesn't mean the same thing to people. So for me, centralization entails taking activities that are conventionally done at property and doing them somewhere else at some central [00:08:00] location.

You'll get a variety of definitions of it across the industry, like people who, you know, if you think about leasing, for example, companies who are supporting property leasing with some centralized teams or some centralized technology, so they can, run a cluster of properties in a more centralized environment, right?

So a central team handles, you know, leads and lead nurturing and and can share leads between properties rather than having everything being handled by individual properties. A centralized solution to that means we don't have leasing agents anymore in every property. We have more and more of the work done by central teams and we share leasing agents between properties that will be a centralized it's a iteration of of leasing, but lots of companies, if they only do the technology bits, like we'll still consider them, consider that a centralized environment in the book, we'd sort of delineate between those things.

So, yeah, short answer is it's it depends on who you ask.

Matt Knight: That's why I asked and that's probably a whole rabbit hole. We can go down another [00:09:00] podcast, but, but for now, I'd love to get into your takeaways from the key findings. We don't have to go through all of them, but if there's anything surprising, cause there were a couple that were surprising to me.

I'd love to hear just sort of your takeaways from the five key findings you put in the conclusion section.

Dom Beveridge: Yeah, well, I mean the five things I'll just mention them really quickly and then we, then we can sort of. Dive deep. So the first one was the, there's this very obvious bias this year towards revenue.

Like if you, it's often the case that one factor explains more stuff than anything else about what's going on in the year ahead. And a year ago it was operating performance because you know, property trading had slowed down so much. But this year the top line is a much bigger preoccupation in the bottom line.

And it's basically because there is so much supply coming into so many. Markets. It's quite an odd scenario. We've got where you have really strong economic fundamentals in places like the Sunbelt, but by any measure, things are going really, really well in growth terms. [00:10:00] It's just that you've got so much new supply out there.

You know, if you've got a city like Austin, where I think it's nearly 25 percent of all apartments, that that's the quantity of new apartments coming to the market in a year. Yep. You don't absorb that many apartments in a year, which means people are going to have softer occupancies. Renewals become this way riskier thing than they did before.

So that's a big preoccupation for people because they're really looking out for opportunities for growth. It has knock on effects on things like technology evaluation. It means that people are, are likelier to prioritize stuff that contributes to revenue, particularly stuff that might contribute to revenue this calendar year.

 That's the kind of thing that I mean when, when we talk about revenue. To just touch on the others fraud is this really big issue. It's always been a sort of background issue in some markets across the US. I was really, really surprised at how big of [00:11:00] a problem it is now.

It's a nationwide problem. It's a problem where it feels to me like this pandemic hangover where, you know, you had eviction moratoria that created this industry for people, educating people on how not to get evicted. Well, from there, it's a pretty short step into, we're going to educate you on how to apply or how to get past people's screening criteria at some multifamily properties.

There's good technology on the bad guys side, which means you've got a really big and growing selection of good technologies on the good guys side. So it's the most evaluated technology in 2023. But yeah, this is by any measure, a really big problem for multifamily at the moment. , the main story on centralization, I don't want to go like, like I said, down that rabbit hole, but I think I feel pretty safe in saying that I think, you know, relatively small number of years.

It's going to be unusual to do admin tasks at a multifamily property. If you think about your average [00:12:00] multifamily property, accounting, payments processing, deposit handling, move in, move out, admin, collections, all of this stuff is done typically by mostly by the assistant property manager. Who works at the building.

Those are the tasks that people are moving off property the most aggressively including the roles that you associate with that. I don't see how it doesn't become a competitive disadvantage to still be doing that at properties. I think that is probably not long for this world. And then the final thing was on AI.

I think it's interesting to think about how people are thinking about AI right now. It's interesting that the very first interview that I did for the very first edition of 20for20 back in 2018, One of the things that, the leader had accomplished was a complete pilot of a digital leasing assistant.

It was the first that I was aware of in the industry. So this is technology that's been around for quite a while now in multifamily. Obviously the difference now is that [00:13:00] you've got generated AI that opens up a bunch of new possibilities. Generally, to the extent that anybody's doing much with generative AI so far, they're looking at back office functions, right?

They're looking at things like, all right, well, how do we use this to automate the IT help desk or potentially some accounting activities? You know, how do we take open AI plus some custom scripts that we write to automate away some tasks. The back office nobody's thinking about anything like that comes in contact with customers.

Although there's lots of AI that's now interacting with residents, that is firmly in the domain of stuff that you buy from from third party vendors that specialize in that. So those are some of the biggest takeaways that I have.

Matt Knight: I guess the revenue one was surprising to me and I know we're low on time, but that was surprising because the narrative I've heard is profit, right?

Because there's no way to grow revenue, at least at the portfolio level. Cause nobody's trading anything. Right. Because so to me, it was like saying, I want to work on my suntan in the winter. And it's like, well, there's no, there's no, You can't do that. Right. And so I've heard people focus more on [00:14:00] profit, but does the focus on revenue imply there'll be more transactions where you can grow top line revenue as a company, or is it more just trying to get back to where we're bumping rents up at the property level?

And that's how we grow revenue. Like, how do you interpret that? I guess is my question.

Dom Beveridge: Yeah. Well, so, the problem that you've got on the revenue side. So, if you imagine, you've got a healthy rent roll in the sunbelt market. And now all of a sudden everyone who's renewing has the opportunity to move to a brand new product probably for the same money or maybe even less because You know people are aggressive in trying to lease up in these very challenging environments I mean, the industry isn't used to having vacancy problems.

I mean, it's been a really long time since that was a thing. And so I'm now going to be worried about renewals. Like if somebody moves out of my property, I might not be able to fill that unit. Or if I can, I'm not guaranteed even a neutral lease over lease trade out. So if you think about like at some point, the interest rate environment [00:15:00] will change and properties will start trading again.

But when properties start trading again, you need your rent roll to be as healthy as possible. So if you're incurring vacancy loss and you're having to engage in steep discounting to fill your property, those are the opposite conditions that you want when the market for trading properties gets good again.

So yeah, lots and lots of pressure to think, okay, well, how do we counteract this? Right? How do we, how do we stop people from moving out? So how do we retain more people? You know, how do we replace rent growth with ancillary revenue? Right? So something like you know, managed wifi suddenly gets this, this big salience, because if I can get a pop of revenue by taking the provision of Internet in house that makes up for some of the shortfall in rent growth.

So, no, people are preoccupied with rent growth for those reasons, really.

Matt Knight: And AI is sort of the, you know, The belle of the ball right now, but anything else that you think is worth sort of pointing out? Like maybe if this is someone's first [00:16:00] time reading it, what's changed besides AI from last year to this year?

Any sort of notable additions or subtractions?

Dom Beveridge: Yes. So the The other thing that I guess we didn't talk about is generally, it's quite an interesting way to track innovation, like this publication, because people tell you what they got done last year. They're telling you what they're working on next year and what their biggest priorities are and stuff.

And get to observe what priorities are with regard to how people are innovating, particularly in their tech stack. And one of the things that I think is fascinating this year is that you can see there's a bit of a pendulum swing from highly innovative, highly disruptive, best of breed vendors in some areas back towards the PMS platform vendors, right? So if you think a couple of years ago, two, three years ago, we had real sort of growth in a really vibrant sector for best of breed and CRM. And the narrative then was that some, some really big companies were really trying to [00:17:00] change a lot about how they lease their units, like how they'd sell their product to market.

So they needed third party companies who could move faster than the RealPages and the Yardis. You know these platform vendors, and that was a big narrative. And you got several companies that started up and became really successful in that market. Most of those companies have now been bought.

And you can tell that the platform vendors are generally trying to close functional gaps with the best of breed vendors. And this is probably quite instructive of the way that innovation works in technology in the multifamily industry, right?

You get these periods where, companies will really try and solve a new problem and it innovates aggressively. And then the incumbent sort of figure out how to come up with something good enough that they continue to retain people. And that's the way that they compete with best of breed.

The term that I've used is that good enough made a comeback in 2023, and I think that's a really interesting trend to watch in multifamily technology.

Matt Knight: I guess my last question before we ask where you want to [00:18:00] send people is. You mentioned big companies, but you've also mentioned you had to have some people with a couple thousand units.

How much of this do you think applies to huge reads, giant fee managers versus sort of the up and comers? Is there a dissonance between the two or is it all sort of broadly affect all of them? I mean, because centralization would make sense if you have a thousand properties, right? If you have six, centralization may not be urge of an issue, you know?

Dom Beveridge: Yeah. It's a great question. And think if I'm the 2000 unit operator, I'm looking at 20for20 to try and understand what stuff is out there that I can benefit from, right? So if I'm a 2000 unit operator, and by the way, there are way, way, way, way, way more of them than there are public rates.

It's Everybody over indexes a multifamily on the NMHC top 50, you know, that set of really big owners, the vast majority of our industry is this sort of sub 5000 unit highly sort of entrepreneurial kind of kind of organization that doesn't have the same options available [00:19:00] to them that a public REIT would, for example, those companies are typically way more fee managed than you're not going to in house management for a portfolio that small typically.

And so the kind of thing that I think is, really interesting when you think about centralization is that in 2023, you started to see companies offering centralized services on this kind of menu structure. You know, the way you normally perform a 300 unit multifamily property is you agree a number of FTEs, a full time equivalence.

And that's how you staff, the property. Everything is just billed back to the owner by the fee manager. Well, because centralization is this big thing, like how do you break that FTE model because you can't be centralized if you've also got all of these resources in individual properties.

Well, the answer that some fee managers are coming up with is instead of having an FTE doing this thing in the property, we're going to do it off site and we're going to charge you on like a per unit per month basis for it. [00:20:00] So it's going to be our W2 employee that sits in some centralized facility.

And you pay me for that, for the services that they provide, you know, I can pick the services that I want off the menu, right? So if I want some stuff and some centralized functions, we can figure that out. And the services that I use, I pay for the same way I would pay for SaaS software, right? I pay on a per unit per month basis.

I think stuff like that's super interesting again, if I'm an entrepreneurial, innovative 2, 000 unit operator that's trying to grow. How will you shop around to find fee managers that are trying to get on top of this opportunity? That would be something I would be looking to this publication amongst other things to tell me.

Matt Knight: . Got it. Well, I know we're out of time, but is there any where you want to send people besides download the report?

Dom Beveridge: Yeah. So download the report for sure. It's a 20for20 dot com two zero F O R two zero. com. You can follow me on LinkedIn. There's going to be a lot of 20for20 stuff over the next a month or so on my [00:21:00] LinkedIn page, Dom Beveridge.

And yeah, I'm not usually that hard to find.

Matt Knight: Awesome. Well, I appreciate you being here, man. Thanks for the time.

Dom Beveridge: Yeah, thank you too. I'm a big fan of your work.

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