The Real Estate Dish: 20 Minutes with Boston Logic President and Co-Founder David Friedman
Join QuantumDigital’s EVP and CMO Eric Cosway as he gets the latest dish on real estate technology with David Friedman, President and Co-Founder of Boston Logic. Recently nominated for an Inman Innovation Award, Boston Logic’s platform empowers real estate brokerages to be technology leaders through digital reach, innovative technology, and global recognition. You’ll hear David’s thoughts on leveraging automation technology in this high-human touch industry, technology adoption at the brokerage level, and tracking ROI on lead to sold data.
Eric: David, welcome to our podcast. Tell me, what does the average day look like now that you’ve got a pretty encompassing role as CEO and Founder?
David: I’m heavily involved in business development. Growth is our number one indicator. Are we growing top line? Are we growing the product? Are we growing the team? Are we growing the shareholder value? So, I’m very involved in anything involving growth, and that definitely includes new clients, new product components, M and A. As the business scales, that means rebuilding parts of the business that may have suited us when we were at a certain scale, but as we’re growing as fast as we are, no longer pass the test. So, as we grow, we have to keep rebuilding constantly.
Eric: How long has Boston Logic been around?
David: We were founded in 2004, and really started being a software company in 2008-2009. We went through a business model transition then. We’ve been offering our platform since 2009.
Eric: You’ve always been an entrepreneur. You have an interesting background. I think I read somewhere that you were the Consumer Educator at Red Bull. Can you tell us more about your experience?
David: Red Bull was in an interesting time back then. It was in 2001. Red Bull had been in the United States for less than a year, and had been around for maybe 3 years as a product. Red Bull had a very interesting campaign going on which was… first of all, they were offering something that tasted like nothing you’ve ever had before. It didn't taste like a specific fruit. It didn’t taste like a cola. Also, it’s a functional drink. It wasn’t just something that tasted good and quenched thirst. It was a drink that was to give you energy, and wake you up, and keep you alert and focused. Functional drinks, and drinks that tasted different—let alone having this weird 8.3 ounce can—it was all very new. The way that they decided was the best way to introduce that to a new market, was actually going out and giving people a can of Red Bull. I was one of those people who was sent out to offer the product. We drove, you might have seen one, these trucks that have a can on the top. I drove one of those trucks around. It was a big Chevy 4-door pickup with a short bed and a can on top. The short bed was turned into a big cooler, so we always had Red Bull on ice, in the back. We would go to events, we’d go to certain businesses, we’d go to certain places, and we’d introduce people to this drink. These days everybody goes, “Oh, yeah! Red Bull, of course!” Well, back then some people were like, “What is that?” It was this weird little can, and “What does it do?”, and they’d taste it. You’d give somebody a can, you’d explain to them what it was, they’d try it, they’d go “What does it do?”, you’d explain the product. So, it was a lot of one-to-one...
Eric: Guerilla marketing.
David: Yeah, consumer marketing, exactly.
Eric: How did you make the transition from that experience into the technology/real estate realm?
David: The transition started earlier than that. Back in the “dot com” era working at sort of a “dot commy” company here in Boston, and Red Bull Northeast was one of our customers. I got into the startup scene back in the “dot com” boom, and really caught the entrepreneurial bug, really enjoyed it. Then, I ended up getting hired by Red Bull when that job ended. I applied for a role with them, and that’s how I got that. I liked the startup thing. Red Bull on the east coast was only like 15 people then. They’d started on the west coast in the states, and moved east. It was the early days—small team, also very startup-like. I always wanted to be in the startup world. When I finished grad school, a buddy of mine and I, we’d always said “Hey, we should start a company together someday.” And that’s how Boston Logic got formed. We were just two guys looking for a company to found, and the real estate/brokerage world sort of found us.
Eric: Was there a gap that you quickly latched on to, and you thought that making something easier, and simpler, and automating it would make a real difference?
David: Not then. That’s sort of where we’ve come to now. I guess the gap that we latched onto… I guess there was a gap then, the automation part was certainly later. Back then, we simply noticed that the real estate brokerage world was behind the technology curve. And, if we’re really honest, it still is. Real estate brokerages are not nearly as technology empowered as so many other verticals. And, to be fair, there are still other verticals that are still behind real estate. So, real estate is not at the very end of the pack, but they’re certainly in the back of the pack. What we noticed was this gap in technology and digital marketing adoption in the real estate brokerage world. And we said, “Okay, these guys are going to figure this out. They’re going to come around.” And that was the inception of Boston Logic.
Eric: When you look at that, I know there’s this notion of platform vs. leads, and vs. a product. The need to create a platform—that was part of that idea?
David: What happened was, we started building these one-off products. We started by first building a property search product. In fact, we were the first IDX search product that plotted homes on a Google map. Version 1 of the Google Maps API came out. We said, “Oh, this will really be interesting.” And that kind of flew off the shelves for a while, then everybody else did it. Then we went and built a content management system, we went a built a rental inventory management system. Back then, rentals were still in binders being faxed around. So, we built a system for that. We built a basic CRM. They were all separate components, and our clients said “If these were all one system, it would make life a lot easier for us.” That was 2008, and in 2009 we combined them into a platform. That was version 1 of the Boston Logic platform. It’s just grown since then. Now that platform has well over a million lines of code, and growing every day.
Eric: As you look back at that, what have you seen as being unique to the technology adoption within the real estate industry?
David: What’s unique to technology is... that’s a good question, which would require someone to understand many verticals at once. What I’ll say is different about real estate—I can’t say if it’s unique—is that when you look at technology adoption in most companies, when a management team makes a decision to implement a technology, they go through an actual implementation process. They instruct their team on how to use it. They then expect their team to use that technology. It becomes part of how the business operates. Unfortunately, the pattern we’ve seen in too many brokerages is that’s not how they operate. They buy technology, they give it to their agents, and they expect their agents just to “do.” And they never actually integrate it into their business processes. What that does is it means that the brokerage will get some percentage of the value, maybe half of the value from the technology, but if they actually integrated it into their MO, it actually allows them to get 100% of value, or maybe 150% of the average value extracted by their peers. You look at some of the most successful brokerages, the ones that are succeeding due to technology, the way they've integrated technology into their day-to-day operations, and the foundations of their business, is incredible. And it really has propelled some amazing growth. Unfortunately, that’s not the median.
Eric: Is it still true that agents sometimes shy away from all this concept of automation, and worry that the technology is going to remove the human touch? And they’re reticent maybe to take that up? How do you alleviate that fear?
David: A few ways. When we talk to a brokerage, we ask them “What are the marketing programs and initiatives that you have in place now, or want to create?” And then we look at how the technology enables those campaigns and those initiatives. It becomes less about implementing technology, and more about delivering the outcomes and the things that the agents want. And the technology just makes it happen. It becomes less of a technology implementation, and more about marketing campaign execution. If you can do that easily—and agents understand the value of good marketing—they may not necessarily want “automation”, or they may not necessarily want to use this piece of software. But that’s less of a concern. They care more about the outcomes and the outputs than they do about the means.
Eric: You’re probably pretty good at telling them what they’re going to miss out if they don’t get on board with automation. What would you and your team tell them about the outputs they would miss out on?
David: First is, fundamentally we all know that there are opportunities within the databases that brokerages and agents have. If you look at the data from the National Association of REALTORS®, they tell you that most home buyers and sellers are very happy with their agent. But fewer than half actually work with the agent… they’re the last agent they worked with when they do a new transaction. They’ve either lost touch, or they end up working with somebody else who happened to reach out to them, or they go on Zillow, and that Zillow lead gets forwarded to somebody else, or realtor.com, or another local website. What they’re missing out on is repeat business. We all know the easiest customers to serve are your current clients, or your past clients. Just starting with the past clientele… that’s a missed opportunity. We see lots of brokerages that are getting all sorts of leads. Either they’re buying them, or they’re getting them from the franchise they’re signed up with, or something like that. They’re not doing a good job at converting those. We see people putting out old fashioned open house sign-up sheets, and they don’t even follow up with the people who walked into their open house.
Eric: It’s not just converting the leads, but it’s actually nurturing them for the long haul. Would that be the two bookends that need a lot of work?
David: They’re two of them. When you say the word “lead”, a lot of people are thinking about the “new lead”, the “fresh lead” you’ve never talked to before. So, yes. Converting and aggregating. When we say “converting a lead”, we usually mean a website visitor converting into a lead. But it’s not just a website visitor on your side. It could be leads you’re buying from some lead generation service, or from a portal—bringing all those into one place. It could be leads you’re getting from open houses, the person you met at a dinner party last Wednesday. You bring all that into your database. And then, like you said, “nurturing” them. So, those are your new folks. There’s also the past clientele, which I wouldn’t necessarily call “nurturing”, you might just call that “working your sphere” in the classic sense. You’ve got a database, and you want to make sure that when any of those folks decide to buy, sell or rent, they’re going to connect with you. They see you as an authority, they see you as a resource they want to employ.
Eric: Why wouldn’t a brokerage take advantage and harness this power of marketing innovation, and being able to routinize and systematize this type of process?
David: I think there’s a few reasons that they don’t. The first one we see is… it’s cultural. Cultural in a few ways. One is, some brokerages don’t actually have a very good level of trust with their agents. We’ve seen agents say things like, “Oh, I would never put my client database into a piece of software offered by the broker.” We say, “Okay, well you’ve got to tackle that before you buy technology.” If you agents don’t believe that you are in business to help them succeed, you’ve got another thing to deal with before you worry about what technology you’re going to put out. That’s not something we can necessarily help with. That’s bullet one. The next thing is, the brokerages actually trust their agents. We see brokerages saying, “You know, we tried that lead generation program X a while ago. We gave the leads to the agents, and we didn’t see an ROI on it. We thought that if we gave them leads for $25 a lead, or $10 a lead, we would see commission slips coming back to us in the hundreds or thousands, and that would be a good investment.” But the agents don’t call them back, they don’t do this, they don’t do that. And we say, “Alright, well… did you have the right followup system? Were you giving them to agents that were qualified and well-trained?” And we asked them a bunch of questions: “What marketing campaigns were you automating to make sure conversion was maximized?” And the answer was, “No, no, no. The agents just asked us for leads. We gave them to them, and it turned out to be a waste of money.” So, there’s some… you know, “once burned, twice scared” out there. That’s one reason. Some brokerages literally hang their hats on this idea that they’re a place where agents come and work, but they don’t meddle in their business. They never, ever want to be thought of in that way, and they might be reflective in their commission structures, or in their revenue model. And their idea is, “Hey agents! Go buy your own technologies.” And that’s why there are hundreds and hundreds of technologies that are being sold directly to agents. Because a lot of brokerages think and operate that way.
Eric: Are we getting closer now to being able to really track the marketing all the way from the lead process down to the closing systems and the transaction systems, to be able to get at ROI data and lead-to-sold data?
David: That is something that we are rolling out presently. For years, we’ve been offering a website, CRM and marketing platform. And that’s kind of where it stops. Once we’ve generated a lead, or gotten a lead into our system, we’re helping like you said, nurture it or stay in touch with the sphere—through different marketing methods like email, retargeting, etc. When the agent then actually started a transaction, they would move off of our software into some other system, probably a transaction management system—your Dotloop, your SkySlope, your DocuSign, etc., BackAgent paperless pipeline—the list goes on. And the data we would sync with those guys, every once in a while would be like, “Hey, here’s the client data” and that was it, pushing over to the other system. What we’re actually getting now is, those third parties, those transaction management systems have now developed APIs that we can actually query and pull data back into our system. And this is sort of the holy grail that we’ve been trying to be able to do for years. So, we’ll actually know—because our CRM has all this—where did each lead come from? You’ve got this many leads from Zillow, this many leads from your website, this many leads from your open houses, etc. We’ll then know which of those leads turned into transactions, and even agent dollar, and company dollar. We’re getting that data now. Some of those integrations are live. Not all of them are live. We’re literally coding this presently. We’re going to be able to put reports in our system that show where you’re actually generating revenue. And that’s something that most brokerages have no idea. I’ll bet 98 to 99% of brokerages do not know where their revenue comes from, which marketing dollar is generating return, and which is not.
Eric: I think I just read, too, that you’ve been nominated for an Inman Innovation Award. Is that part of the secret sauce? Why Inman thinks there’s something there?
David: I hope so! Interestingly, what Inman did, they nominated us for an innovation award for another product we rolled out called “Ace.” In the last 12 months or so, we rolled out Ace. Ace is actually in reaction to another observation we made. Boston Logic is known for working with brokerages of all sizes. But what really makes the front page news is the larger brokerages we’ve worked with. What we noticed was the larger brokerages have really capable staff—they have a Director of Marketing, they have a CMO or a CTO—they have people who are W-2 employees, who can take a platform like ours and really leverage all the power in it. When you get to the smaller brokerages—of which there are many more of them, and even the teams out there—what we noticed is that they don’t have that staff. So, what happens is the digital marketing, and the management of the software, and the website becomes a shared responsibility. And we all know in business “if it’s everybody’s job, it’s no one’s job.” That means, the client would roll out, and they’d get to a certain point, and a deal would come along, or some other initiative come along, and they’d just get busy. They’d only ever get our platform up to a certain point. We’re always rolling out new features, and we’re always saying “Hey, you should think about this next campaign.” And they just don’t make the time. What the Ace product is, we’ve coupled the platform with your Ace, which is your person who helps you execute and administer the system. It’s literally saying “Hey, we do not have this person on staff, but we do want to leverage the Boston Logic staff for implementation and execution.” That comes with the software license. That product, Inman thought, was innovative enough to be nominated for an Innovator Award.
Eric: You speak at a lot of conferences, you’re well-known. Tell our audience something that we don’t know about you.
David: I’m an avid skier, and I spend a lot of time out in the woods. There’s two sides to me. There’s the businessman capitalist, then there’s the guy who spends a lot of time hiking, and biking, and skiing, and climbing. That’s something that a lot of folks might not know about me. I also like to cook. And I like to build things, so I’m always wrenching on something, or sawing some wood in half, or something like that.
Eric: Given your busy role, do you actually have time to pursue your hobbies?
David: I do. I try to make time. My wife and I have a country home in Vermont, and I keep my tools up there. That’s where we do our hiking, and skiing, and stuff like that. I’m definitely sort of a weekend warrior in that regard. If you met me during the week, as you and I have met, you might not know that. But, if you saw me on the weekend, you’d see a slightly different guy.
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