Max Brun breaks down three startup ideas that keep failing in real estate: consumer interior-design apps, startups trying to undercut agent commissions, and Airbnb property-management plays. He draws on his own investing experience to explain why incumbents like Zillow and structural industry problems make these bets nearly impossible to win.
Chapters
So what do you think some of the biggest mistakes that you see with founders are that they make when they're building in kind of real estate and housing? I mean, there are 2 things that I have been seeing startup pitches, I guess 3, over and over and over and over again that always try and fail in the real estate space. One is the interior design thing, the take a picture of a room and then swipe, swipe, swipe to change furniture, change furniture. So like the, you know, kind of democratizing access to interior design. I've invested in a couple of those. Zillow invested in a couple of those. They've all failed over and over and over again. The second one is lowering commissions overall. And maybe this is the right time for it because the industry changes, the regulatory changes I mentioned, but there have been a zillion startups that have been like, I went to buy my first home at 27 and it pissed me off that I had to pay 3% or 6% or whatever. And I'm going to democratize access to real estate with lower commissions. Zillow does not do that, by the way. Like Zillow actually, you know, people think Zillow's a disruptor. Zillow's not really a disruptor. Zillow actually is a leech that sits on top of the commission pool and just sort of siphons off ad budgets away from agents that otherwise would've gone to newspapers. So the true disruptors in the real estate space have failed over and over and over again because the cartel is really strong and has made it difficult for commissions to, you know, to erode. Now might be the time perhaps, but I've seen a million startups try and fail. And then I guess the third one is not really directly in real estate, but it's kind of more in like prop tech, broadly speaking, which is the sort of short-term rental, like we're building a business, like we're building a brand on top of Airbnb. So we're property managing hundreds of short-term rental homes, or we're buying them, or we have a prop co-op co structure. But basically we're going to be like Hilton Hotels is to the hotel industry. We're going to be on top of short-term rentals. And there's a lot of venture capital that's gone into startups there. Most of those companies have failed. I've invested in several of them. So I mean, each of those 3 ideas are good ideas. One of the— it'll happen eventually, but like, gosh, there's a lot of startup blood on the battlefield from all 3 those, all 3 of those fields, throughout the 3 of those ideas.
