Software didn’t eat Real Estate. AI Will.

In 2011, Marc Andreesen, a prominent venture capitalist wrote a popular piece describing how “software is eating the world.” The premise was that more and more businesses and industries would come to be run on software and delivered as online services. After six decades of technological progress, the underlying infrastructure was finally mature enough to transform entire industries. For many industries this prediction has come true and there are many successful businesses that have been built on these trends. Uber did it for transportation, Stripe has done it for payments, Twitter(X) and Meta are doing it for the media. 

Meanwhile, talk to any Real Estate professional and you’ll quickly find that software has not eaten real estate. Manual processes are the norm and tech adoption is fragmented, if it exists at all. Why is that the case? Why has software come to dominate so many other industries, but hasn’t been able to make inroads to real estate? 

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I wanted to find the answer. Previously, I had worked as the CFO of a real estate development group so I had some initial theories from my own experience but I wanted to validate those assumptions within the broader industry. I ended up talking to over 100 developers throughout the past couple of months. In our conversations, I would ask what day to day work looked like at their firms and what tools or processes they used. We also talked specifically about tech adoption - what the pros and cons were, and what opportunities or challenges they saw to broader adoption. 

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From this formed a broad outline of why the real estate industry has been so slow to adopt technology. There were many insights, but there were three key themes emerged:

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1. Real Estate exists in the physical world. This was the most obvious(duh), but it’s also one of the most important things to remember. Real estate assets exist in the world of atoms. Using software necessarily requires translating that into the world of bits. Many developers don’t use better software, simply because the data entry, transformation, and maintenance is too much work. Because the data entry has not happened, real estate has largely not been digitized.
2. Every single real estate asset is a 1-of-1 unique asset. No two projects are the exact same, and there are thousands of ways they can be different. Everything from legal organization, promote structure, zoning, neighbors, material types, contractors, sun angles, who currently works at the permitting office, street names, and the list goes on. It’s traditionally extremely difficult for software tools to capture all of that nuance. But if the nuance isn’t captured, then the tools don’t work and developers get frustrated.
3. Human to human relationships matter. This is a feature not a bug. Developers don’t want completely automated tools for everything, because they want to have a relationship with their bankers, their investors, their builders, their brokers, etc. They want to have a physical presence at their projects and in their communities.  

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AI changes everything. This sounds trite and cliche, but it’s true.  We are probably a long way off from true artificial general intelligence, but specific artificial intelligence is already here. Large language models are capable of structuring unstructured data and understanding nuance and detail in a way that computers have never been able to before. This is a fundamental shift that is going to radically change many industries (real estate included), and the change is going to happen faster than people think. 

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At Deco Base, we’re building an AI platform for real estate developers.  Right now, the product does a few things:

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1. Digitizes real estate development projects. As a RE developer you can upload any development document (contract, invoice, loan docs, bylaws, etc) and Deco Base automatically extracts relevant information and manages updates to proformas, action items, crm, etc. 
2. Completes tasks with full, nuanced, context. Deco Base uses all the extracted information and context to build a nuanced model of your project.  Developers can then task the AI to complete workflows and answer questions, but with the full context of their project. Some great use cases are construction draw requests, updating comps, responding to diligence, or reviewing contracts. 
3. Puts humans back in control. Simply put, real estate development requires human to human interaction. AI can’t shake hands with an investor or speak up in city hall. Developers can. AI can manage tedious, repetitive and boring work. AI is coming for our jobs - but it’s coming to help. 

If you’re interested in learning more about Deco Base or AI in Real Estate more generally please reach out. I’m always available at skyler@decobase.app.

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