Zain Jaffer on 3 Tech Tools to Grow Your Portfolio – EP 284

The Fastest Way To Build A Six Or Even… Seven Figure Real Estate EMPIRE! 

If you want to automate and explode your real estate business, check out my coaching program!
Coaching

I’ve often talked about the kinds of people you need to surround yourself with and your connections to build a thriving, profitable real estate portfolio.

But I probably haven’t discussed the tools and technologies you can offer your business partners, teammates, and employees to the same degree. There are several solutions you can use to create more cash flow, provide fewer concessions, increase property value, and make things safer for your teams–and if you’re wondering where to start, you can start with this episode.

I’m thrilled to be talking to Zain Jaffer. Zain is a serial entrepreneur, venture capitalist, and real estate investor. He’s a partner at Blue Field Capital, the Founder and CEO of Zain Ventures, and is the PropTech VC and host of the PropTech VC Podcast. Before breaking into real estate, he also built an ad tech platform called Vungle and sold it to Blackstone for $780 million!

I know you’ll enjoy this conversation as you’ll hear all about his journey from founding his first company at the age of 14 to his $780M exit. He shares the industry-specific tech tools he uses (that you can use, too!) to make your life in real estate easier, and who will (and won’t) win deals in these tough economic times.

Key Takeaways with Zain Jaffer

  • What Zain sees happening in the real estate market in the next 3 to 6 months and what he’s most excited about in the short term.
  • How the current economic downturn and panic selling affect commercial and residential real estate.
  • Why Zain is all in on Deep Sentinel, Stake.Rent, and Canopy Analytics.
  • How Zain founded his first company at 14, used his exit to start building his real estate portfolio, and achieved success by under promising and over delivering. 
  • The three technologies that Zain uses in his company that can help you too.
  • Why entrepreneurs should choose to make less money today to ensure they’ll stay in business forever.

Zain Jaffer Tweetables

“Invest in the fact that outlier events will happen, make it a core competence to understand how insurance works and security works, because you will get hit one day and you want to be able to bounce back quickly.” – @zainjaffer

“Always manage expectations, under-promise, over-deliver, and do things the right way because if you want to stick around long term, word gets around fast.” – @zainjaffer

Resources

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Josh Cantwell: So, hey, guys. Welcome back to Accelerated Real Estate Investor. This is your host, Josh Cantwell. And I have a fantastic conversation with you today to share with you. I’m interviewing Zain Jaffer. He is the founder and CEO of PropTechVC. He was successful at growing and building his original company, which was called Vungle, which he sold for $780 million to Blackstone. Vungle was actually an advertising platform specifically for mobile devices that he built and sold to Blackstone for 780 million. Today, Zain is very passionate through his company called Blue Field Capital, very passionate for technology inside of real estate investments. So, he’s the host of the PropTechVC Podcast. He also invests in technology companies that specifically provide services to the real estate industry and specifically multifamily. And he also buys real estate across the United States through Blue Field Capital, runs his own family office, called Zain Ventures. And he is a phenomenal guest.

 

And we’re going to talk today, number one, about his starts in building his first original company, number two, how he sold that business to Blackstone for $780 million. Number three, he’s going to give us three specific technologies that he’s using in his multifamily properties that helps him create more cash flow, offer less concessions, and increase the value of his properties and make things more safe and easy for his teams. You’re going to enjoy those three resources in particular. Zain also looks back at his entrepreneurial journey and everything that he’s accomplished and tells us a couple of things that he’s really proud of. So, you’re going to love this interview with the CEO and founder of PropTechVC, Zain Jaffer. Here we go.

 

[INTERVIEW]

 

Josh Cantwell: So, Zain, listen, so excited to have you on Accelerated Investor. Thanks for carving out some time. How are you?

 

Zain Jaffer: I’m doing great. Thanks for having me on the show.

 

Josh Cantwell: Hey, listen, I’m always excited to talk to successful entrepreneurs and business owners, and especially in today’s crazy economy, facing a possible upcoming recession, rising interest rates, and things are very, very different than they were just even six months ago but there’s great entrepreneurial stories happening all the time, regardless of the economy. So, I’m excited to hear, from your perspective, what you’re up to, what you see happening in the marketplace in the next 3 to 6 months, and some projects that you’re working on that kind of get you going. So, what are you passionate for, Zain? How are you expecting to kind of operate in this environment and what are you most excited about in this next kind of short term?

 

Zain Jaffer: I wear many hats. And what I would say I do primarily is I buy real estate and I invest in startups that service the real estate segment. And both are so different and have been so different over the last 6 to 12 months and will be different over the next 6 to 12. On the real estate side, I’m part of a private equity firm, Blue Shield Capital. I have billions of dollars of real estate across multiple asset classes. We wrote 100 straight offers last year. And for some reason, like brokers didn’t get back to us. We weren’t even the top three or four.

 

Josh Cantwell: So, it doesn’t matter if you have billions of dollars. They treat you the same as the rest of us, huh?

 

Zain Jaffer: Exactly. And then recently we started to get called up by brokers and they’re like, “Hey, remember that deal you bidded on? Well, you know, the seller really likes you. It’s just that the other person had a higher offer, but there was no earnest money. And now they’re retrading terms. We’d like to revisit your offer.” We’re getting lots of that happening right now and it’s like, yes, this is the time to buy. We’ve been sitting on the sidelines trying to buy and now I feel like this is a good opportunity. On the other hand, when it comes to startups and investing in technology companies, oh my God, the last 12 months were so heated. And I did a lot of deals, right, and I just had to deal with the fact that the market’s the market. You have to pay a high valuation to invest in certain companies. Now, it’s just a bloodshed. You’ve got public stocks that are down 80% from the all-time highs and that means you need to 5X your investment to make your money back. That’s scary.

 

So, on the startup side, I’m seeing a lot of damage right now and there isn’t any calibration happening. What I mean by that is that’s probably how you have sellers who have unrealistic expectations, right? And you have buyers who are kind of in tune with mortgage rates. Well, in the startup ecosystem, things take a while to trickle down. When public markets collapse, it flows through very slowly. And I’m still seeing many founders trying to raise insane valuations giving hyperbolic pitches about taking over the world. And on this side, where I’m sitting, it doesn’t fly anymore. It’s like, “Wait, I’m not going to pay 100X forward revenues.”

 

Josh Cantwell: Right.

 

Zain Jaffer: And valuations have changed as a result.

 

Josh Cantwell: I mean, the market imploding, Bitcoin imploding is really what happened in the past 30 to 60 days, right? So, things can just change that fast when the market’s not as liquid and people are taking bloodbaths in other places. And so, what do you think will be happening now going forward? Obviously, this recession is going to be a continued discussion probably for the next 18 months. And so, what adjustments do you continue to make on those valuations? Because what’s happened in the short term is probably only going to get worse, no?

 

Zain Jaffer: You know, first, I want to take a step back and talk about the last six months. And I have to say, it feels like every single asset class has been hit negatively, every asset class. You can leave your money under a mattress six months ago and we will have maybe 4% less if you take dips in inflation rate? Or you could do what everyone did, take the money, put it in stocks, and now you took your money not to lose 8%, and now you’ve lost 50%.

 

Josh Cantwell: Right?

 

Zain Jaffer: The crypto is down. All the startups are down. Real estate is finally coming down on the commercial side. On the residential side, not so much. So, I’m seeing a 10% to 15% decline there. Not as significant, right? And a lot more panic selling now happening on the real estate side. Hedge funds have not been performing. Most of the hedge funds I’ve invested in through my family office are just giving me dismal returns. And it’s like, wait, I don’t get it. You’re in the bull market. You guys didn’t outperform. And now during a bear market, you guys are actually correlated returns. What is going on? So, every asset class has been hit. So, I think the corporate Wall Street world and family offices, we’re all suffering right now. It’s sad to see what’s happening. Now, on the valuation side like I mentioned on real estate, I’m seeing 10% to 15% declines and I’m getting that signal from multiple brokers and also just how we’re bidding.

 

It does affect the way we bid on projects because before, you could play around with some assumptions and those assumptions where just people were making the spreadsheet fit the deal eventually. Let me fine-tune the interest rate. Let me fine-tune the rent growth. Let me fine-tune the cap rate compression. And let’s just assume cap rates will compress. Whoa. Suddenly, if you just take the variable like your interest rates, that materially impacts cash flow-focused investors. So, real estate, definitely going to give. Startups, I’m still seeing a disconnect. I’m here thinking how am I seeing pitches when founders are raising in crazy terms? I’m not okay with that anymore. I can’t just invest in an idea and a deck and it’s not a repeat founder or it’s not a very exciting area like Web 3. If it’s traditional PropTech, I’m seeing some founders that are very reasonable and realistic and they’re raising on terms that I can see myself making money on, then I’m seeing others where it’s like, “Why would I invest to a crazy valuation? I need to make a 10X minimum return.” I’m not going to get that. So, I think the multiples are going to start going down significantly and it’s going to be an amazing time to buy both real estate and invest in startups and real estate.

 

Josh Cantwell: I got you. I love it. I definitely have seen the sheets, the decks, the pitches with ultra-low interest rates, ultra-low cap rates, and very high rent growth. And all those levers have moved all in the opposite direction. And you got to hit, hit, hit, interest rate higher, cap rate higher, rent growth not as high. And all of a sudden it’s like, “Whoa, okay.” You know, you’re talking about millions and millions and millions of dollars, especially on those deals in the Sunbelt that were trading at 250,000 a door, 400,000 a door. It’s all going to come down. It has to. And you got to be smart about it. But you seem excited. Money people would be like, “Holy sh*t, like this is going to be rough.” You seem excited though, about the buying opportunity.

 

Zain Jaffer: You have to be. This is where money is made in situations like this. That when COVID struck, I was trying to be very aggressive and we bought some things but I thought that buying window is only there for six months max. And during that time, a lot of things happened. We had the rug pulled underneath us from mortgage lenders who were like, “Oh, we need to slow down a little bit. We’re trying to figure things out right now.” And a lot of our peers also panicked and didn’t want to, you know, they wanted to just take a breather, see where things were. If you had cash at that time, you could make all-cash offers and get retraining of terms. That’s just a fact of business like the market changes if we want to do this deal. So, we did a bit of that. We got some good deals. But then everyone caught on to the secret. This time it feels different. This time I think we’re waiting for at this point of time that we’re recording this podcast right on 19th of May 2022, I think we’re waiting for the market to reach its bottom. I think right now LP is a breather. We run a fund and we’re shy of calling capital right now. We don’t really want to give a capital full to our LPs because our LPs are also probably struggling. They’re like, “Okay, wait, what’s happened?”

 

And a lot of people were doing something. Me too. I’m in this bucket. I had a lot of liquid securities that I was borrowing against at very low-interest rates. And then you’re collateralized in your securities and you’re buying real estate, you’re playing arbitrage, you’re borrowing at, I’ll tell you, sub-1% interest rates for a while, right? You’re investing in real estate that’s generating you 7% to 8% cash from cash and it’s a bit lower sometimes, right? You’re playing arbitrage. Now, suddenly you’re like, “Whoa, I don’t want a margin call.” And I really don’t want people calling capital for me because this is a period where I just want to see things stabilized. I’m in the process of signing a lot of real estate right now. And believe me, I started to feel that heat. Brokers were telling me, “This is my family office portfolio, not Blue Field.” Brokers are telling me too, “Hey, the Fed’s going to increase rates,” and I’m like, “Whatever.” Like it’s a great market out there. I want to hold out a little bit longer. Suddenly, when that rate increased, I’m like, “Hey, let’s put everything on the market.” I wasn’t allowing it.

 

Josh Cantwell: But as you know, like the market not only built in this core first-quarter point and a half point, but the markets significantly overreacted with expecting significantly more interest rate hikes over the next six months. And then what I saw was even perm financing jumped from 3.25 to 5. I was back down to about 4.5, right? But the market overreacted to all those interest rate bumps, has settled back down at 4.5. And now we’re going to see what’s going to happen now but the market typically reacts very quickly. The Federal Reserve reacts very slowly and the market reacts before the Fed. So, the market jumped and now it’s settled. I’m excited to see like as deals come out and we’re really bullish on Ohio. I’m specifically investing in Ohio, especially because of the microchip stuff, you know, Intel. Facebook just announced that they’re going to put data centers in Dublin, Ohio, just outside of Columbus. The connection between Columbus and Dayton. Cincinnati is there.

 

There’s some really special economics there for this, what they’re calling Silicon Heartland. I would love that. But it’s not as competitive or overbuilt or so much competition as the Sunbelt. But I have a feeling Ohio is going to have some lags because of the real economics. But it’s been nice to see some people who are really kind of cowboys in the way they were making offers to hopefully get kind of knocked out of the market. I’m actually excited about the next 12 months of the people who are real operators that really know how to evaluate a deal and are patient and smart. Those are the guys that are going to win deals here in the next 12 months when a lot of people are going to run scared. What are your thoughts?

 

Zain Jaffer: You know, just yesterday we closed on a hotel in Dayton itself in Ohio, an 84-room hotel. And it’s just like markets like this that aren’t necessarily mainstream, the T-1 core market, that’s where the best, where the solid fundamentals, where there’s a lot of employment diversity in Dayton’s case. There’s lots of manufacturing not so far away. You’ve got really strong fundamentals and population growth. That’s where the money can be made big time and that’s where I’ve tried to focus too. But yeah, I’m very excited because I think our approach has been we try to find markets also where there hasn’t been too much institutional heat. So, we come in more where there’s a lot of mom and pop owners and we can sort of consolidate and come in at that $10 million to $15 million acquisition range and be a serious buyer in town. Right? So, we’ve identified a few core markets and it feels like this is the best point now because mom and pop owners are getting a little bit nervous because they’re seeing like, okay, we were holding out like I was holding out with some of my properties. Holding out, oh crap. Interest rates are increasing, oil barrels are going to run dry. We people in real estate who are conservative really start to gravitate towards the fear of not great anymore, right?

 

Now, so we’re excited because we can buy, buy, buy. We have dry powder sitting on the sidelines. We do a unique model, too. We have a fund that we buy real estate from like Blue Field but we also put a portion of the capital stock to syndication. We’ll offer it out to LPs. That’s where I’m seeing a little bit of struggle now. It’s like, wow, folks who were very happy to write $1,000,000 or a $500,000 check are like taking time now. It’s like this is the time to be aggressive in that.

 

Josh Cantwell: The investor, right, most of them are just reading the news, seeing their accounts go up, and thinking that they’re geniuses.

 

Zain Jaffer: Yes.

 

Josh Cantwell: I’m like, “Oh, sh*t. I’m not really a genius,” because I had one investor saying, “You’ll appreciate this, guys. I bought a million bucks with us,” and he starts to pull some money off the table because he’s “playing the market.” And then all of a sudden he’s like, “Yeah, I think I’m just going to pull it out and keep playing the market.” And then that was 60 days ago. Now, he calls me back just a few days ago. He was like, “Yeah. Those 6%, 8%, 10% prefs, those were really, really good that you were paying me.” I’m like, “Yeah.” Like, that’s the stuff like apartments is people if they’re not aware, apartments, multifamily, especially suburban C and B class, they did really well in the crash of ’08, ’09, ‘10. Depending on where you get your information, they might have dropped in value maybe 8% to 11%. And so, as this continues to happen, because the single-family market is so tight, there’s no supply, these people have to live somewhere. So, it’s just one of those kind of backbone of your portfolio positions that’s just something smart to invest in. Again, not in those gateway markets, the Chicagos, the San Franciscos, the Dallas Fort Worths, but those B class, secondary, tertiary markets, that’s my favorite. I love it.

 

Zain, listen, I know you’re busy, I know you have a limited amount of time. I want to hear more about PropTech and I want to hear more about what’s happening with the technology world that you have so much insight into that is helping people be better operators, better evaluators of real estate. What’s happening in that space that is revolutionizing the way people invest in and manage real estate?

 

Zain Jaffer: Every asset class was impacted through COVID. And what I found happened is that the real estate industry has been very slow to adopt technology.

 

Josh Cantwell: Very slow.

 

Zain Jaffer: Everything is run on spreadsheets and you ask any fund how they differentiate, you hear the same, can I say nonsense? “We have relationships. We’ve known this broker for so long. We worked on this construction for so long.”

 

Josh Cantwell: My spreadsheet is better than yours.

 

Zain Jaffer: None of this is sustainable as a competitive advantage. You’re going to be disrupted by the Blackstones of this world as they automate what they do. And so, PropTech is basically selling technology to the real estate sector. And when COVID hit, the entire office sector, the entire retail sector, and hospitality sector, and the industrial supply chain sector boomed, right? Suddenly they now need to look at technology to reinvent the way they operate. Surprise, surprise. Wait. Who would have thought having contactless check-in solutions or smart locks would suddenly improve your costs and allow you to print more money and NOI? And so, what I love about PropTech is that many of the technologies hit the bottom line. And if you can show a real estate fund manager that I can improve a net operating income, this technology provides an ROI. You spent X and you save X when you make more. That’s valuation that you capture. You know, it incorporates a small saving can result in a huge increase in value. So, that’s what PropTech is, investing in any technology that the real estate sector can use.

 

Josh Cantwell: Got it. Give me some of your favorites. So, I own 3,000 units. I’m an active operator. You know, we syndicate but we tend to keep about 60% to 70% of the equity for us as GPs. We give up 20% to 40% to LP. So, we have a very nice and healthy balance sheet and I’m always looking for new ideas and opportunities to increase our NOI and make things smoother and easier. So, you’re looking at wi-fi access, keyless entry, some of these types of things. What are some of your favorites that maybe you’ve invested in or some of the things that you’re looking at that you think, well, from the technology space impacts your personal portfolio?

 

Zain Jaffer: It’s like asking me to choose my favorite child. Here, I got 34.

 

Josh Cantwell: Give me a couple. We’ll pick two or three.

 

Zain Jaffer: I’ll pick two or three. Okay. I’ll give you some really quick, easy ones. Deep Sentinel, founded by the former co-founder of Redfin. He’s a really hot entrepreneur. I’ve implemented this in my portfolio. I have some Class C workforce housing where there’s been a lot of crime. I’ve had people murdered on site, literally, that type of place.

 

Josh Cantwell: Okay. That happens.

 

Zain Jaffer: And we looked at security personnel costs, tens of thousands a month, and they want armed guards there, two people at least. Generic traditional security systems are useless because you have to make sure you record properly, they’re not stored very long, and they’re not actively monitored. What Deep Sentinel does is, is this camera with live monitoring. Imagine like somewhere around the world, there’s like a group of people looking at the screen. And when the AI or the human notices something that isn’t right, they’re able to communicate through the camera and say, “Excuse me, can I help you? You’re trespassing.” And word gets around and residents know, “We’re being monitored.” And we’ve caught crime happen and that person is able to call the police for you. They’re not just able to tell you, “Oh, my God, something’s happening,” they’ll call the police proactively and say, “We’re calling the police. You need to evacuate immediately. You’re trespassing.” Crime is completely stopped and that solution was very, very low cost. So, that’s Deep Sentinel.

 

Another one I really like and I’ll talk about post-housing because I’ve enjoyed that. It’s been tough. Stake.Rent. That’s a company that provides cashback to tenants. The idea is rather than offering concessions like here’s four weeks’ worth of rent for free if you sign the lease now. Tenants don’t appreciate that. Instead, “Hey, if you sign the rent now, we’ll give you $200 into your account.” And you know what? You can have a bank account with Stake. You can have a debit card with Stake. And as you pay your rent on time, you can unlock more and more. We’ve reduced our delinquencies, we’ve increased our cash collection, obviously. We’ve managed to get rid of concessions in many of our properties by having Stake there. So, Stake is like wonderful.

 

Josh Cantwell: Wow. Love it.

 

Zain Jaffer: Another one that’s really good for folks who self-manage is Canopy Analytics. I’m on the board of that company, so I want to disclose that. I’m an investor in all these companies. I should disclose that too. But what I found that Canopy does that’s really cool is I can see my entire portfolio and all the onsite staff, the asset management team, the executive team can communicate on there and they can see like, “Okay. Let’s zoom in. Let’s see the reporting for this specific property.” I can leave a comment. Okay. There’s an insurance claim. They need my approval. I’ve been assigned a task. It’s just an operating system for managing your entire portfolio and I think owner-operators really need that. And if you have third-party managers, you appreciate the pain. You’re overloaded with emails and reporting if you’re lucky to get reporting consistently too. And if you have multiple third-party managers, it’s a nightmare so Canopy sort of consolidates that. Right now, mainly focused on owner-operators but they’re building a solution now also for third-party fee managers. So, these three I could quickly think of.

 

Josh Cantwell: Right. I love it. Well, the first one that you mentioned, right, so I have a C class property and sure enough, about a year ago we got some video. Again, the video wasn’t that great, very grainy. Some guy makes his way into one of the garages and all of a sudden there’s just this poof of fire that comes out of the garage right after he walked out. The guy lit fire 2:30 in the morning on a Wednesday. He lit front of the garage for no reason. And so, it ended up taking down five of the garages. The garages burned to the ground. The fire department has to be called. Sure enough, he hit another complex. This is a little complex I own, an 80-unit. He hit a 300-unit the same night down across the street. And if that monitoring had been there, of course, he picked the garage in the back with the least amount of lighting and that ended up being a $350,000 insurance claim. And those are being rebuilt right now. We finally finalized the scope of work and all that stuff with the insurance company. So, real application there, guys of how to use some of this technology to make your building safer, collections better. I love it, Zain. Appreciate those couple of inputs there.

 

Zain Jaffer: Well, just to add there, right? For all the folks starting out in real estate, it’s very easy to think, well, this is just a 12-minute building I’m buying or a fourplex. But if you want to be in this game long-term, you have to take a portfolio approach. Just that example you mentioned of this, what you would say tell-type of activity where you’ve got a crazy guy who’s an arsonist. That’s going to happen in a population. When you have hundreds of people, 1% or 2% of the population does have some problems. They can be criminals. They can be lunatics. When you run your business to thousands of people, you are going to every day be dealing with some type of insurance claim. So, you better make it your business now when you’re starting out to implement the infrastructure and technology because you may get unlucky and get hit when you’re targeted but I guarantee you, when you’ve got 3,000 units in your portfolio, you’re going to have stories to tell. And your goal is to get the tens of thousands, obviously, hundreds of thousands of units one day. You better make sure, not you, but the listeners, right, like invest in the fact that outlier events will happen, make it a core competence to understand how insurance works and security works, and just run things professionally because you will get hit one day. And when that happens, you want to be able to bounce back quickly.

 

Josh Cantwell: No doubt. No doubt. I tell my group all the time, “Look, you have to act as if you have a 10,000-unit portfolio, even if you don’t yet.” The only way you’re going to have a 10,000-unit portfolio is if you act as if you have it now and eventually you’ll just get there. It’s only a matter of time but it starts up here in the mind and if you’re constantly telling yourself, “Well, I don’t really need to do that yet,” there’s going to be a time in the future that you need to do it. You’re going to think, “Oh, crap, I should have done that three, four, or five years ago.” So, act as if now and then those chaotic moments, they won’t take your business out. Zain, I am interested to hear you came to this country, started your first company at 14, later moved to the U.S. as an immigrant. You’ve got unbelievable success in building this office, family office. Tell me about the original start. Where did you know that you had this entrepreneurial bug? Where did you know that real estate and technology was the path that you’ve done?

 

Zain Jaffer: Yeah. You know, I was born in the U.K. My parents were immigrants and grew up in a poor neighborhood. So, I was able to stay out of trouble by just playing around with computers and I just kept building websites. My voice broke quite early, so puberty hit early. So, I was able to pick up the Yellow Pages and call companies and convince them they need a website. Of course, horror would strike when they wanted to meet face-to-face. I’d have to come up with every excuse possible and instead just start designing the product to send it to them. “Look, here’s your website. You want to pay me?” They’re like, “Okay.” So, I did that for a while and I just sort of always had this knack. You know, I grew up in the time where websites were a thing. And then my biggest success was when applications started to become a thing as well. And I had the idea, let me build a niche. Let me put an advertising company that shows ads on smartphones. And at that time, people were dealing with farting apps and flashlight apps. I didn’t understand like why you would do such a thing but I saw that apps are going to change the way we operate.

 

And so, I built my company there and it was a major exit, $780 million acquisition. And after that, after not taking a salary for so many years, I just wanted to jump onto the other side, which is real estate. I’d see people and can I say half the people in real estate are idiots. And that’s why it’s so easy to make money, right? The other half, we’re doing the other half of very intelligent misinformation symmetry. But I see folks make stupid decisions that buy something, use crazy leverage. They would even screw up the project and yet they’re able to sell it for a lot more than be getting, you know, they’d be able to do 1031 exchanges and get cash flow. And I was like, “I need to understand this.” And also, real estate is always a key part of people’s portfolios when they reach a certain network. So, I always look to my family after someone actively get expertise in real estate. And it’s a $300 trillion asset class. There is no asset class in the world that compares to that. You know, the global value of currencies is only even measured in the single-digit trillions, right? So, you’re dealing with hundreds of trillions of dollars. It’s very exciting.

 

Josh Cantwell: So, Zain, now that you’ve added real estate to your portfolio through this massive exit and you’ve had the opportunity to be on the technology side, start young, see the benefits that real estate offers, looking back at your path, right, over the path of entrepreneurship, starting at a very young age, being an immigrant, I’m always curious to see someone who’s really made it start from zero and really make it. What would they do different or what did they think they got right? So, I’m curious to hear maybe one or two things that in your path you’d look back and say, “You know what, if I could do it over, I would do this differently,” and one or two things that you say, “You know what? I absolutely did this right. I made these correct decisions.” And that’ll help our audience with their entrepreneurial path. So, what are your thoughts on those two?

 

Zain Jaffer: I would say the way I ran my company and the decisions I made, I operated with a lot of integrity. I saw competitors get away doing things that really were illegal at the time and they were unethical. And we lost a lot of potential sales and revenue because we did things the right way. And I always believed in under-promising, over-delivering. I never wanted to take any money from investors even now that I run my fund unless I’m sure I’m going to do them right and I’m going to make them money and I’m going to 100% focus on this. And so, always manage expectations, under-promise, over-deliver, and do things the right way because if you want to stick around long term, word gets around fast. And you can make a quick buck, you can screw someone over, but the real estate sector, the technology sector, the tiny places, it’s an echo chamber. The world catches back up with you. So, that’s the hard thing that I did. And at times I felt like, man, I could just do this to just revenues, but I didn’t. And long-term, it worked. We lost clients because our competitors were offering and not just unethical stuff like we maintain gross margins.

 

I really believe in maintaining gross margins when you run a company. We had really high margins in the 40% range for just an ad. If an advertiser paid us a million bucks, we’d keep 400,000 for ourselves and we’d give 60% to the website or the app that showed it. Competitors came in who were offering 100% rev shares and like 80% rev shares. Of course, we’d lose clients and say, “Hey, you guys are taking so much.” And I’d be like, “I know we are but we have a business to run and you shouldn’t be upset about us sticking our feet because the absolute dollar will be higher. But go ahead and work with these other companies if you want. And guess what? Many of those companies are bankrupt.” Reinvest our margin back into building a better product. And it’s the same with like a broker. You know, brokers are always like, “Reduce your fee.” We should be happy to pay that broker a fee like incentivize them because they’re going to make you big bucks, absolutely. And I think once people start to realize they’re trying to do it themselves or they try to negotiate on cost, you’ve got to feed everyone around you and everyone wins like you want to be paying large tax bills. That’s a sign of success.

 

You want to be paid commissions to your salesperson. You want your salesperson to be earning millions of bucks a year because that means you did something well. So, I think going down that view of making sure everyone wins when they work with you is definitely what I did right. And you know, my early employees are millionaires as a result. That’s what I did right I’d say.

 

Josh Cantwell: That’s fantastic stuff. Like, sounds like the word that kind of resonates in my mind as you’re talking. You played the long game, the infinite game, right? I’m going to play the game to be in business long-term. I need to make a large gross margin to do that. I’m not going to shortcut it just to acquire a client. For today’s revenue or next quarter’s revenue, we’re going to focus on the long-term paying brokers, again, long-term infinite gameplay. Those are the things that are different for somebody that… And, guys, listen, it’s okay, like Zain said, to not make as much money today to be in business forever. Right? Would you rather be in business forever and make money forever and make a little bit less money today? It’s okay to do that, right? To pay someone else big money, to pay your salespeople, to pay a broker, to pay someone on your team large commissions so that you ensure the lifeblood of your business for a long time, that your family gets paid and their families get paid and you take care of these people. Playing the infinite game can be very difficult when you’re in startup phase, but it has to be something that’s on your mind. That’s on my mind all the time, Zain. I love the fact that you brought that up. It’s a big cornerstone of what we do as well.

 

Zain Jaffer: Thank you so much.

 

Josh Cantwell: Zain, listen, I’m sure our audience is going to want to learn more about you or connect with you, obviously. Just tell of a couple of websites, social media, places, platforms that they can learn more about you and follow you and your journey.

 

Zain Jaffer: Yeah. I have a platform called PropTechVC. You can reach me on zain@proptechvc.com and you can read some of the stuff I’m up to on there.

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