The Pioneers Behind PropTech: In Conversation With David Thomas

This article is the first in our interview series titled "The Pioneers Behind PropTech: Meet the Top Innovators Shaping the Future of Real Estate". In this series, we deep dive into where key industry thought leaders see PropTech heading.

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Our Co-Founder and CEO Emiel Bril recently sat down with David Thomas, Director of Innovations and Portfolio Management at Veritas Investments, as well owner of transformRE, an advisory and consulting firm, to discuss the future of PropTech and how he believes it’s shaping real estate.

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David is a strong advocate for technology's role in transforming the industry and has led major deployments for a wide range of technologies across several areas. Catch all of his insights below. 

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Tell us a little bit about yourself, your journey to date, and what led you to real estate.

I've been in real estate since I graduated college back in 2008. My first job in the industry was a leasing agent. I learned a lot, but I got fired because I couldn't rent apartments in the middle of the 2008 crash. 

I kept at it and got into property management, working for a great family in San Francisco doing ground-up development and existing management, which exposed me to a lot of new areas of real estate. 

I then went into the lending business for a while, managing big REO portfolios and being a loan servicing manager. 

After many years of experiencing different areas of the real estate industry, I joined Veritas Investments. Veritas is a vertically integrated and tech-forward real estate investor in San Francisco. We do all of our own property management, maintenance, asset management, investments and more in-house. 

At Veritas I helped to build their tech stack from a PropTech perspective. We did a lot of venture investing, we advised startups and we tested a lot of interesting technology. We built an amazing platform to manage this unique asset class of old scattered site buildings in San Francisco.

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How would you summarize your role at Veritas? 

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It's a lot of hats. It's a small company, very startup-like. Half my day I spend as an asset manager, and then the other half is looking at PropTech companies. 

We did 20+ venture investments over a 5-year period. We advised a lot of early-stage startups, helping them launch their first product, testing things out. We have an amazing test bed in San Francisco, I could take a product and put it in a 25-unit building and test it out. If we could prove some value creation with the product and get some positive feedback, we could make a decision to expand it to all of our buildings. If it doesn't work, we impact only 25 units. We can undo that. It’s all learning.

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You sit in a really unique position with a unique vantage point because it's not common that you have someone running a portfolio and running tech and innovation. It's typically quite separated. And there's tension because you have different priorities than they do. 

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Absolutely, yes. I could go find an amazing product that I think is great, but I do need to ask myself, will this work in my portfolio? Will my LPs agree with this? Does this make sense to do? So there’s certainly a benefit, but it makes my job tough. Sometimes I find some really, really cool stuff I want to do, but I need to take that step back to ensure it's truly additive to our portfolio and not a distraction. 

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You have a really unique role that a lot of people admire and aspire to achieve. What are some of the key moments along your journey that define your success?

I exposed myself to a lot of different types of real estate over the years and different roles within those companies. I've worked on investment teams. I've worked on asset management teams. I've done hands-on property management. I started as a leasing agent. I try to be involved in everything in the real estate space in one way or another. 

So I think it gives me a very unique perspective as I evaluate a product or look at something. I've been that boots-on-the-ground property manager or the person doing due diligence on a building. That hands-on experience helps a lot. Also, the great people and the culture that Veritas has built goes a long way to being a leader in innovation.

I never set out to do innovation, but in every role I had I was always looking for ways to improve what we were doing. I didn't know much about venture investing. But we started this journey and learned a lot as we were going.

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Do you think a tech founder that wants to build a tech solution for real estate that doesn't know real estate can truly succeed?

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Yes. I think they can but it helps to have partners who know real estate to guide them. For me, if I tried to be a founder, I think I'm a bit jaded with my experience, I might not have that entrepreneurial spirit in certain areas because I just think “there’s no way that will work.” Someone else may push that boundary and succeed in it. 

I know a lot of amazing founders from the real estate world, but probably more that don't come from real estate, and I've seen both succeed. 

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What are some of the biggest disruptors or the things that will be disrupting property management in the coming years?

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I focus a lot on AI and centralization. I think that however you want to define centralization, that model is going to expand. More and more people are interested in that, and AI only enables that further. 

I see a lot of amazing tech that can simplify real estate organizations. What I tell people today is, don't be that asset manager who implements a new product, that new AI, and expects it take away jobs. Be that asset manager that implements it and can 5x your own work product. 

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Outside of centralization and AI, is there anything that is less spoken about that is a unique opinion that you hold?

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Coming from Veritas and small unit count multifamily, I think that is a massive untapped market. Think about a place like San Francisco, mostly multifamily, very few single-family homes, mostly small unit count. I'm talking 20, 30 units on average. 

The largest owner in San Francisco owns less than 2% of the inventory. It's very, very, very fragmented. And if you look at any large city like San Francisco, Los Angeles, New York, Boston, Seattle and Denver, it’s very similar dynamics in all those cities. 

Places like Austin or Nashville are a bit different. You have explosive growth. You can build in any direction you want to. 

I think the institutions are going to hone in more on small unit count. And I think those operators who can do it from a technology perspective are in the driver's seat.

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One thing that we see at VendorPM is real estate owners and operators having to walk between balancing their legacy tech solutions with the modern best in breed. How do you think about this balancing act?

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It's tough. The backbone of everyone's system tends to be one of the legacy systems. And you're trying to plug everything into it. The legacy systems are doing a better and better job of modernizing and bringing solutions that are tech-forward. 

So there's this definite battle today between the legacy system’s new tech-forward solution, or going with the start up. Is the start up going to survive? Are they not? 

You have to choose well as an organization. Is that startup going to continue to evolve their product? Are they going to just stay in their lane or are they going to start going horizontal? I think the number one pain point I hear from people is that there are too many point solutions. I'm looking forward to those point solutions going horizontal a bit more.

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At VendorPM we started out with two core value props. We built a marketplace to connect vendors and property managers. We built bidding software to be the most efficient way to run your RFPs and RFQs. Then we built vendor management and compliance. Do we continue doubling down on that, or do we start getting into areas like contract management or payments? What guidance and advice do you have?

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Every real estate organization is built a bit different. In some organizations, you have that person who all they do is compliance. Some organizations have someone else doing contracts, someone else doing payments. So depending on how your customers are built, if they have those different verticals within their team, it could be okay to be the best there is for each specific role. 

But if you've got one person doing all those roles, plus payments and other things, they are not going to want to use VendorPM for one thing and then another product for something else. As companies like VendorPM evolve, it makes sense to be the best at one piece of the puzzle. But then once you are, you have to start building the additional pieces to avoid having so many point solutions.

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What are you personally working on next and what’s your focus?

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I am currently working with Veritas on a small real estate portfolio and managing Innovations. I am also consulting and advising others in the real estate industry. I focus on helping those who are looking to review or implement new technology within their portfolio and to centralize operations. I am also working directly with startups who need help tackling the multi-family world. 

I love working with founders and I am working with several startups right now. I love helping owner-operators and third-party managers figure out their tech stack. Whether it's a specific problem such as trying to figure out a maintenance platform, or to evaluate their tech stack and tell them where there are some opportunities.

Centralization is a big thing I've worked on a lot, so I love helping organizations on that centralization theme.