Building The Future Show - Radio / TV / Podcast

Michael Colacino:
Welcome back to the show.

Today we

Kevin Horek: have Michael Kohler Chino.

He's the c e o at Square Foot.

Michael,

Michael Colacino: welcome to the show.

Uh, thanks Kevin.

Nice to be here.

Kevin Horek: Yeah.

I'm excited to have you on the show.

I think what you guys are doing
at Square Foot is actually really

innovative and cool, and I'm also
curious to get your thoughts on how

you handled the, the pandemic and,
and coming out of the pandemic.

But maybe before we get into all
of that, let's get to know you a

little bit better and start off with

Michael Colacino: where you grew up.

Sure.

I'm a New Yorker, born
and bred, as they say.

I've lived here my entire life, except
for the six years that I went to college.

Very

Kevin Horek: cool.

Okay.

Uh, so what did you take in college

Michael Colacino: and why?

Uh, well, that's a good question.

I, I majored in James Joyce.

I was an English major.

Okay.

And, uh, I thought at the time that I
would be a writer and, uh, I loved Joyce.

I had read him in high school,
and so I spent my entire college

obsessing about him, uh, until I
got to the end and realized that

there weren't a whole lot of job
opportunities for James Joyce Scholars.

Kevin Horek: Interesting.

So what got you passionate
about writing at an early age?

Michael Colacino: Um, I was a big
science fiction fan, actually.

I, I really enjoyed science fiction.

I was an only child and, uh, you
know, if you're an only child,

you have to make your own fun.

Sure.

Um, and what I would do is I would read
like two books a day over a period.

Many, many years.

Yeah.

.
Kevin Horek: Okay.

Interesting.

So walk us through.

, you, you get outta school, you, you
know, kind of went back to school.

Walk us through that and your
career, maybe some highlights

along the way, and then we'll dive

Michael Colacino: into, uh, square foot.

Sure.

So I, um, as an English major, I, I
wasn't really sure what I was gonna do.

I thought I'd go to law school,
but both my girlfriend and my

best friend went to Harvard Law
School in Stanford, respectively.

And they both hated it and they told
me that I would hate it, and they

also told me that they would hate me.

Um, and so I did exactly what
George Costanza did, which is I

said, uh, I'll be an architect.

And my concept of architecture was
just about like, George is that

you get a T-Square and, and work
for Vandalay Industries, I guess.

Uh, so I did actually one smart
thing, which is I went to work for an

architectural firm in New York, came
back to New York and I had one, uh,

marketable skill, which is that I had
taken a year long programming course.

At, at Harvard, which was
essentially a, uh, a full

undergraduate program in a year.

Okay.

And so I got a job as a programmer
in an architectural firm, and

I realized very quickly that I
did not wanna be an architect.

It's a very, um, it's a tough business.

And the company had an interesting idea,
which was to bring computer technology,

software to, uh, architecture and to,
uh, real estate and space planning.

And it was a tad ahead of its time, 1981.

Um, um, and then what happened is
we spun off the company and there's

many, many chapters along the way,
but I ended up being the president

of that company in the mid 1980s.

And then when we busted, because, uh,
lots of startups bused, you only hear

about the ones that are successful.

But we were one of the ones
that was not successful.

We were ahead of our time.

And so I did management consulting
for five years, from 87 to 90.

In a small, uh, consulting firm,
mostly advising, uh, landlords, large

landlords on how to use systems and
technology for, for their business.

And so all of this is kind of
the dark ages of technology.

I mean, there was no internet, there
was no, uh, there was no nothing.

You know, basically we, uh, we
had local area networks and Max

and, and it was pretty primitive.

So I got sick of that.

And in 1991 I went to a brokerage
company called Studley, which had been

around since the fifties, specializing
in representing tenants exclusively.

And I was there for a decade and
I became a pretty good broker.

Pretty, pretty good as, um, Larry
David would say . And at the end

of that, um, in 2001, we bought the
company from the founder, a guy named

Julian Studley since passed away.

And it was a really good, uh,
transaction because the company was

a terrific group of people that, uh,
I had worked with for a decade and,

uh, that I really enjoyed being with.

And I did that until 2014.

We were the, I was the president
of that company till, uh, 14, and

then we sold it to a large British,
uh, sorry, large, publicly traded

British company called sabs.

Kevin Horek: Got it.

Okay.

Very cool.

So what made you come
to Square Foot and what

Michael Colacino: exactly is.

Yeah.

So, um, at the end of my contract
in 2018, I realized that this large

amount of PropTech, uh, venture money
had flowed into the PropTech space.

And so I decided, you know, if I was
gonna do this marriage of technology

and real estate, I had to do it now.

So, uh, I spent a year shopping
for companies and, uh, talked to

a lot of CEOs, talked to a lot
of, so a lot of business plans.

And the one that I liked the best
was square foot because it was as

close to what I had been doing.

Uh, um, as, as any of the companies
that I looked at, excepted at a

couple of fundamental differences.

The first, it was a purely technical,
technologically driven company.

It was based on the technology and it had
therefore much younger, uh, workforce that

had been built kind of from the ground up.

And I found it very
refreshing to be around them.

And I thought that it was exciting
to finally get the chance to bring,

uh, the real estate business into
the 20th century, much less the 21st.

.
Kevin Horek: Very cool.

So walk us through, because
you were president and then

you became c e o, correct?

Michael Colacino: Yes.

So every comp Go ahead.

No, no, you go ahead.

Sorry.

Well, every company evolves and, uh,
the founder of the company, Jonathan

Wasserstrom, was a brilliant guy who had
a brilliant idea and, uh, he brought the

company to a, to a certain level, but
at a point, uh, of growing the company

nationally and maybe internationally.

Uh, it's useful to have done that before.

So Jonathan hired me as president
initially here in November of 2019.

Uh, not great timing, by the way,
because Covid was right on the horizon.

Uh, and then as we grew the business,
uh, over time it became more and

more apparent that my skills would
be useful being in the c e o slot.

And so Jonathan moved up to chairman,
uh, and I slid over and, uh, took over

as the c e O at the end of the summer.

Kevin Horek: Got it.

A and actually I think that's really
good advice that like sometimes you

need to, you know, make a change
based on getting like somebody like

yourself that's been through kind
of the next evolution of a company.

Right.

I think that's actually

Michael Colacino: really
good advice in itself.

Yeah.

Well Jonathan is a high, is a
very high character person, and

so his interest is in the idea
and the company and the people.

And sometimes, you know, that means
leading the charge and sometimes it

means, you know, bring in somebody who,
uh, has done it before, as you said.

And I don't like to make analogies with
Steve Jobs, but, uh, the fact of the

matter was, you know, Steve Jobs had
that same idea, uh, too he was wrong.

It turned out he really was the
right person to, uh, to do it.

So who knows that at the end of the
day, maybe Jonathan will be doing

the job and I'll be doing something.

Kevin Horek: right.

Yeah, no, that's interesting.

So before we dive into kind of the
transition and, and you know, your

thoughts and how you got through the
pandemic, let's dive into what exactly

Square Foot was maybe when you joined, and
how has it changed to what it is today?

Or, or how has it stayed the

Michael Colacino: same?

Sure.

So the, the basic, one of the basic
problems with the industry is a lack

of transparency about the product
that people are interested in.

So a tenant cannot really find, uh,
office space on the internet very

different from residential, where you
can go on Street Easy or Zillow and

see pretty much the entire market.

Um, the industry in the commercial
and the office side has been

essentially, You know, non-transparent.

So the first thing that square foot is,
is it's a listings platform that allows,

uh, a user to look at the space in the
market that they're interested in, and

both see it, you know, in the sense
of understanding its basic terms and

economics, and also understand it, uh,
by getting in contact with a square foot

broker because we're a brokerage as well.

So the first thing that, the, that the
company is, is it's a listings platform,

square foot.com that, uh, brings in
people who are interested in office.

. And uh, the second thing it is,
as I said, is a brokerage company

where if you need advice in figuring
out what to do, we have brokers on

staff that will help you do that.

And, uh, that's pretty much
the core of the business.

Uh, when I started, there had been an idea
that the company could use very junior

people directly outta college because
the platform, uh, for implementation

of the transaction was sophisticated
and would guide people through.

But at the end of the day, there's
something about being a real estate

broker and understanding how to execute
transactions and serve clients that

really required more senior people.

So one of the first things I did with
Jonathan is I said, Hey, you know,

you have an engine here for creating
leads and opportunities that no

other major brokerage company has.

Why don't we go out and hire a bunch
of, you know, mid and scenery level

people and use that as an inducement
and produce a much more high revenue

better, more successful company.

And we decided to do that
right at the beginning of 2020.

And, uh, you know, in March of
2020, uh, many businesses were,

were harmed, but our business was
absolutely stopped in its tracks.

Uh, there was nothing that we could do.

We couldn't show space.

Um, we can't do transactions.

And so we spend most of
2020 doing a couple things.

One is surviving, sure.

And the second is, uh, applying focus
towards the product and the strategy so

that when things turned around, which
they started to do initially at the end

of 2020, um, and then slowly through
2021, that we would be prepared to grow.

And so in 2021, we expanded from
New York, which is where we started.

Uh, and we had offices set
up offices in Los Angeles,

Houston, Atlanta, and Nashville.

So we're now kind of a, a small
scale national brokerage company.

.
Kevin Horek: Got you.

Okay.

So walk us through some of the
decisions that you made in during

the pandemic to basically survive.

Like did you, were you, are you
guys venture funded, self-funded?

A bit of both.

Walk us through.

Yeah.

Uh, where you are with
that or where with that

Michael Colacino: at the time?

Yeah.

So at that time, the company
was exclusively venture backed.

Okay.

And he just com completed a
fundraising round at the end of 2019

and 20, at the beginning of 2020.

Okay.

Which was extraordinarily good timing.

Sure.

Because that provide us,
provided us with the capital to,

to survive, uh, as as we did.

And, uh, so that was what we did there.

I, I'd say there's two lessons that I, I
kind of have learned over my career and

some research that I've done that I think
is, is useful for people to hear about.

The first lesson is that when
something bad happens, you

have to take immediate action.

And the tendency, uh, especially
if you're, uh, a human being

and you, and you care about your
people, is to sort of freeze in

your tracks and hope for the best.

And so I had been down in
downturns in the late 1980s and

early nineties, in 2000 and 2008.

And in each of those situations, the,
the people who had took immediate

action survived and did well.

In fact, in, in oh eight, as soon as the
crisis began to manifest itself, I started

immediately, uh, reorganizing the company.

And we did that immediately.

And so we did the same thing here.

Now, the thing is that the second
lesson, which is one I've learned more

from the academic side, from like the
Harvard Business Review side of things,

is that companies that cut sharp.

Um, do very poorly when they
come out of a recession.

And companies that are in denial and
don't do anything, do very poorly.

And the companies that do well are the
ones in the middle that do two things.

One is become more operationally
efficient, which means doing the

same stuff, but for less money
and, and in more efficient way.

And, That invest in growth in, in spite of
the fact that the recession is happening.

And there was a survey done once of CEOs
and, and they said, you know how many CEOs

in this survey, it was like 60 of them.

How many of you think that it's a great
idea to invest heavily in a recession?

And like, you know, 58 outta 60 said yes.

And then the follow up question was, well,
how many of you have actually done that?

And the answer was like, 12 . So it takes
a lot of, uh, combination of, you know,

will audacity and uh, and good financial
backers in order to be able to actually

invest when, when things are looking grim.

But that's what we did.

That's how we built out
those offices, uh, in 2021.

And we made ourselves operationally
efficient by going and looking

at every expense that we had
and saying, if we wanna do this,

can we do it for half the price?

And that's exactly what we did.

Interesting.

Kevin Horek: Okay.

So walk us through what's
similar and what's different.

Pre and post pandemic because your
industry's really taken a hit.

Right?

And obviously with some people staying
remote, a little bit of a hybrid approach

or even being fully back in the office,
what have you seen, because you're in

Michael Colacino: the thick of it, really?

Yeah.

Well, uh, that's a very,
very complicated question.

And, um, it also suffers from, you
know, strong tendency towards bias.

Um, because obviously I'm in the business
of providing, um, real estate for people.

And so I'm gonna think of
it in, in, in those terms.

What I would say is the following,
uh, number one is that, um, hybrid has

been around for a long time, and remote
work has been around for a long time.

And if you look at the history of it,
organizations that have tried to do it

have been almost uniformly unsuccessful.

And this goes back to the
1990s when at and t tried it.

Yahoo tried it, i b m
tried it, they all failed.

And so I think we have
to, uh, think about.

You know, George Santiana who
said, if we don't study the

past, we're gonna repeat it.

So that's, that's number one is
I'm, I'm a little skeptical overall

about the ability to completely
have a remote, uh, workforce.

Um, I think another point that's a
little bit contrarian is that, In terms

of demand, office demand, it's not a
linear function, it's a step function.

And by that I mean that if I decide
that people are gonna work at home two

days a week, that does not directly
translate into a 40% reduction in

demand, uh, in my need for office space.

Um, and I could actually make the
argument that Covid and all of

the challenges that has brought.

It's brought about means that people
should actually take more office space

in order to be able to make the space
more accommodating for their employees.

Um, and so I think there's a
lot of confusion about that.

People say, oh, well, people are
gonna work at home two days a week.

Everybody should get rid of,
uh, uh, 40% of their space.

But the problem is that people are not.

, you know, they're not fungible.

They can't just be moved around.

Like they need a place
to actually come to work.

And if you have a system that's set
up to do hoteling or hot desking,

those are two sort of term terms
of art about having people make

reservations to, to get a space.

It works very, very poorly.

Imagine if you have all the challenges
that you'd have w at work, and also

you have to figure out where you're
gonna be in a given day and on Friday.

Um, when a lot of people are not
there, it's easy, but on Tuesday you've

gotta make a reservation and turns
out the space isn't available for you.

So I think it's very penny wise
and p pound foolish to think about

this kind of linearity of something
that's essentially a step function.

And I think it remains to be seen
what the effect of, of work from

home and remote work is gonna be on.

I should also say that, you know,
the, the CEOs, this is another

contrarian perspective of which, like
with Elon Musk out today, I think

it's very interesting because CEOs
have been very quiet about trying to

get people back to work generally.

I mean, there have been a few,
like David Solomon of Goldman

that have been out there.

Sure.

Um, but I think that the theory is that.

, you don't wanna look like
a jerk if you're a c e o.

And if you're demanding people to come
back too soon, when a pandemic has

been raging and killing people, um,
you really are gonna look pretty bad.

So I think you haven't really heard a
lot from the CEO e o side of things.

Um, and I think that what you'd
find if you really poll CEOs or

generally managers, that they would
tell you it's a whole lot harder

to manage a business remotely.

Uh, that's, that's largely remote.

And I think that they've been
quiet about this in large measure.

I mean, Musk has been very forward,
but a lot of people have kind of

kept their mouth shut because they
don't wanna look like that guy.

Uh, but at the end of the day,
I'm telling you, it's a hard job.

Running a large enterprise and not know
where people are at any given moment

makes it a whole heck of a lot harder.

And so I think there's gonna be some, um,
movement and a pendulum on the part of

CEOs basically telling people, look, you
know, we, we love the idea that you're

have some flexibility built into your
life, and we wanna accommodate that, but

at the end of the day, we've all gotta
be in the office a significant portion of

the time or else we're not gonna function.

Kevin Horek: Interesting.

So then how is like with you being
c e O now, how is your team kind

of in the office, outta the office?

Or how are you kind of being
accommodating to that coming outta the

Michael Colacino: pandemic?

. Yeah.

Um, so I guess, you know,
this is a startup, which means

it has a startup culture.

And as I said, there's a lot of young
people in the company, uh, and just

my style is such that, you know,
I wasn't laying out down edicts.

I'm, I'm not Elon Musk.

I'm not an edict guy.

And so what we did is initially,
uh, we allowed people to come in

whatever they, they wanted during the
course of the, um, of the pandemic.

And then we gently put in a three
day a week, uh, requirement,

uh, and said that we expected
people in three days a week and.

A month ago, we went to four days a week
and, and we said, really, it should be

Monday through Thursday and people can
work, uh, wherever they want on Friday.

And I think that's a, a pretty
good compromise cuz it gives a

full day for people to be able to
do all the personal things that

they like having flexibility to do.

Um, but by the same token, and you
know, the, the energy and the dynamic

of the company is back to where it
was pre covid because four days a

week, pretty much everybody's here.

So I think that's our solution.

Uh, I think everybody's gonna have
to find their own path with that.

Uh, but I do know something which is that
it's, uh, it's just a much better vibe.

The culture has to do with action.

Like culture is action.

It's what people do every
day that makes a culture.

And if you're not here, it's
very hard to have a culture.

Um, and so that's, that's
my, where I come down on it.

Kevin Horek: Interesting.

Yeah.

Like as somebody that's worked at
home, for a number of years and

kind of, sometimes I'd have to go
in the office a few days a week

or a few times a month, whatever.

I've kind of done it.

It's, you're right, the, the culture
stuff, it really sucks if you

haven't worked with the people for a
number of years in an office before

and know each other really well.

Yeah.

Michael Colacino: But if you join a team

Kevin Horek: remote and you don't know
the other people, there is no culture,

like you barely know each other.

It's kind of quick small talk and
it's, it's, and I haven't seen

it work personally to be like
a new person on a team and kind

of feel like you're a part of a.

Like a part of a culture.

I feel like there is no culture,
and people could argue that

with me, but it sounds like you
would probably agree with that.

Michael Colacino: No, I, I
definitely agree with it.

As I said, culture is action, you know?

Yeah.

There's a lot of discussion.

What, what is culture?

Culture is what you do.

And so the thing is, is that if I
wanna take care of somebody or help

them or be there for them, , it's
just a lot harder to do it on Zoom.

I mean, it's not impossible, but at
the end of the day, the, the moments

where you create a culture is where
someone says, look, I'm having a

really serious problem right here.

Can someone help me?

And then someone jumps in
and says, I can help you.

And you know, again, it cannot be
done via Zoom, but it's just a lot

better when you can walk over to
somebody's desk and, and drop your

problem on their desk and get help.

So, um, I think, I think over the
long haul, there's been a reason

why people work in an office.

Uh, it's not for everybody.

I mean, there's lots, there's lots of
heterogeneity, as the economists say.

You know, different strokes
for different folks.

I mean, highly, um, highly introverted
people probably thrive, you know,

when they're, when they're at home.

And highly extroverted people suffer
when, when no one's in the office.

Uh, and it's, so it's gonna
be different, different, uh,

accommodations for different.

But one thing I will say is that what
we haven't heard a lot of discussion of,

we've heard a lot of the discussion of the
impact of trying to force people back into

the office, but we haven't heard a lot
about the effect on people who are wanting

to come back in the office on not having
their partners and their peers with them.

And I think over a gradual period
of time, people begin to realize

that there's an externality here.

And the externality is that when
someone chooses to stay home, there's

someone else that's getting affected.

.
Kevin Horek: Yeah.

I've heard that from a few people
that like going into the office

and they feel like they're one
of the very few people there.

So they're like, well, now I'm sitting
at my desk, or I'm in the boardroom

at the office having Zoom calls
with people that are at home . Yeah.

So it's like, yeah, it's, I'm, I'm
curious to see how it plays out.

For sure.

Michael Colacino: Yeah.

What the pandemic proved
is, is really two things.

One is it proved that we could
all work at home and that the

world wouldn't come to an.

And that's an interesting thing, but it,
it's different from saying that, you know,

remote work is, is the way of the future.

It's different.

And the second thing improved is that
a lot of people really like working

at home and they say that their
productivity is improved by being at home.

And I'm not sure exactly how I feel
about that because, uh, if you like it,

you know, maybe you're a little biased
yourself about how you think about it.

So those are the only two
things we really know for sure.

We don't know if people are
more or less productive at home.

There's been a ton of
studies that have been done.

They're all over the map in
terms of their conclusions.

Um, and so yet it remains to be
seen whether or not businesses can

be competitive and effective with
workforces that are largely, uh, remote

as opposed to largely in the office.

And I, it'll be interesting
over the next couple years.

Uh, one thing I will say this, which is.

We as real estate people and architects
out there, if there're any architects

listening, we should do a lot of soul
searching because part of the reason

why people are reluctant to come back
to work is that people hate the office.

They just dislike their offices a lot.

Uh, I'm in an office right now, which
is a benching type office where people

are kind of crammed together, which was
very dega you know, a few years ago.

Everybody thought, okay, let's, you
know, put everybody side by side

and get 'em as close as possible,
and then it'll collaborate.

Well, more recent studies have shown
that that is actually a terrible way

to, to work, and that people tend to
communicate more via email when they're

all benched together than they would if
they were in a more typical environment.

So, other than the cost benefits of
cramming people together into into

Carols and into benches, I'm not really
sure there's a lot of utility for it,

and I, I think that we should all look
at ourselves and say, is this the way

we should really have people work?

Or should we try to think
about what their needs are?

And maybe being jammed together
and having 80 square feed per

person is not the correct answer.

.
Kevin Horek: Interesting.

Okay.

No, I, I agree with you.

That's, that's interesting.

So I want to get back to square foot.

So walk me through, I'm a business
owner and I wanna rent some space.

Walk me through me coming to the
platform, using the platform, and

then kind of what happens ongoing

Michael Colacino: as well.

Sure.

That's a, that's a question
I'm happy to answer.

Um, well, so first of all, I have to
ask you a question, which is, sure.

I always ask people this question,
which is, do you believe that in the

future everybody is going to start their
search for an office on the internet?

Now think about it.

Um, I, I think the answer
is yes for me anyway.

And, and, uh, I'll ask you whether,
what you think about it in a second.

But the point is, is that we've learned to
shop for everything and to get everything

of importance to us through the internet.

Over a period of a decade, but most
specifically over the last two years.

So what do you think of that thesis?

Yeah, I agree.

I start everything on the internet, right?

So, okay.

So the first premise of our business
is it maybe now only a small percentage

of people start on the internet,
but eventually everybody will.

And that means little companies, startups,
intermediate size creatives, law.

And General Motors, everybody is gonna
start their search on the internet.

And um, and if nothing else, just
to get informed about what the

reality of the market is before
you go out and start engaging, you

know, your big brokerage company.

So if you believe that, then the
question is where are they gonna

end up when they do that search?

And our mission is to make sure
that they end up on square foot.com.

So if you go to the internet, uh, and
you type in, I need 5,000 square feet

of space in the Flatiron District in
New York City, you are gonna end up

on a Google page that's gonna have
us at the top or close to the top.

Right.

And so the first thing that someone
does is they click on that and they,

they end up going on a site which
actually shows them things that are

5,000 square feet of space in Chelsea.

And it's got pictures and it's got
descriptions, and it's got information.

And so they look at that and, and they
say, oh, I get a sense of what's going on.

And then they're asked to engage, uh,
with the system and type in their,

uh, email address and phone number.

And that's step, step two.

And step three is they'll get a call
from, from one of our, what we call

business development representatives.

They're not brokers.

Their entire mission is to call someone
and say, Hey, I just saw that you're

looking at some space on the internet.

Can I help you?

Like, what is it that you need to know?

And the person on the other end usually
says, well, I'm not really quite sure

how much square footage I'm gonna need.

Or they say, I don't know what the rents
are really gonna be, or, you know, are

there other places I should be looking?

They have a whole series of, of
questions that they ask, which are

not what typical broker calls are.

Most broker calls are trying to get
somebody who has no interest in space,

um, to have a meeting with them, you
know, when their lease doesn't come up

for four years, which is a very, very
miserable, you know, existence by the way,

Yeah, I can imagine.

That's how I started anyway, so it's,
it's not fun to call someone who has no

interest in talking to you about space
and trying to get a meeting with them.

But we do instead, as we give you some
information that's useful, uh, that you're

looking for at the, at the given moment.

Uh, and so after this conversation, the
business development person says, well,

would you like to talk to a broker who
has a much more comprehensive knowledge

of your market and can put together a
report of all the available space in

that market for you to talk through?

And would you like to do it
on next Thursday, for example?

And you'd be surprised, a very
large percentage of people

say, sure, I'd love to do that.

And so next Thursday, uh, they get a,
an email, uh, with a link in it and

the link brings them onto our site
into a different place, which has,

uh, the space report that shows all
the available space that's available.

Uh, that they asked about, and then
they'll go through it with a broker

and if they see something that's
interesting or several things, they'll

arrange to go look at the space, like,
let's say the next Thursday after that.

So within a couple weeks, they've
gone from searching on the internet

to actually physically looking
at space with one of our brokers.

Um, and so one of the key things
about what we do is speed to market.

Uh, our goal is to get these things done
quickly and efficiently so that executives

don't have to waste their time or
anybody doesn't have to waste their time.

Uh, going through a lot of
process that's not necessary.

We try to get them to the space as
quickly as possible so they can see what

the market is and, and go from there.

And then from that point forward,
the platform essentially guides you

through the transaction process.

So you issue proposals, you mark them
up, you do all the stuff that, uh, that

you do as a typical real estate broker.

Uh, and at the end of
the day you sign a lease.

And, um, and that's, that's
sort of where you finish.

Kevin Horek: Interesting.

The one thing that I
thought was interesting.

and I, obviously, I don't know
much about the space, but what I

thought was interesting about what
you provide is I can type in how

many employees kind of, right?

Uh, average like space, rough space
per employee, but then you actually

recommend additional things to me that.

From my perspective may or may not
dawn on me that I actually need.

Is that fair to say?

Or, or

Michael Colacino: maybe elaborate on that?

Yeah.

Well, I think it goes to the overall
mission statement, which is the idea is

that we want to give people help, uh,
and figure out their space search in any

way that we can through the internet.

So we're not demanding that someone
come in and have a meeting with us in

order to kind of find out about stuff.

We'd like to push as much information
and knowledge out onto the internet as

possible, uh, with the theory being that
if you help somebody, uh, it builds trust

and then that makes it more likely for
them to wanna work with you down the road.

So we have a whole series of projects
of, uh, what I would call sort of

educational, uh, projects to help
people figure out their needs when

they've got, uh, when they've got a
space requirement that's coming up on.

So, for example, one of the
things that's very okura, right?

As people are looking at, uh, at
booths, like the one that I'm in

right now, I'm, I'm in an office,
but I'm also inside of a booth.

And that's something that has a
lot of benefits in terms of privacy

and in terms of acoustic isolation.

And so figuring out how to
incorporate those into a space

plan is an important thing to do.

And we're working on software to be
able to help people figure out how many

of these they would need, uh, how much
they would cost, and how to enhance a

typical layout with this kind of post
covid useful tool in the design of space.

Kevin Horek: Yeah, interesting.

Because I think that's
the challenge with just.

Me seeing a driving by a building and
being like, Hey, I like that building.

It's in a good location.

I should reach out and see if
I can just go check up a space.

Right, right, right.

Sure.

And it, it, it's just a
complete stab in the dark.

And then when I wander through,
I need to envision like, well,

I need to, is there a kitchen?

Do I need a kitchen?

Do I need some of these pods?

Do I not need these pods?

Like how many conference or
meeting spaces do I need?

Right.

Like some people envision that,
some people can't vi envision that.

Right.

Right.

And so the fact that you help kind of
that whole process where somebody knows

what they're from, somebody that knows
exactly what they need to somebody

like me that would need a lot more

Michael Colacino: guidance.

Right.

You know, it's interesting
when I first came.

I had worked in a traditional
brokerage company for 26 years

before, before I came here.

Yep.

Um, I would've said that the most
useful thing for a, uh, for prospective

tenant would be a floor plan that
shows that the plan and the space.

And there's no question that a floor
plan is important, but when I got here,

I realized that for our users, it's
much more important to have high quality

photographs of the interior of the space.

And in fact, and, and
so that's what we do.

We have lots of good quality pictures
so that you can actually see what the

configuration of the space is today.

Uh, and then as we evolve, the next
step up is gonna be Matterport and

video, so that people are gonna be
able to visualize the space more

than just as a group of pictures,
but actually in, in three dimensions.

And while we are not, you know,
we're not a Matterport providers,

like there's other people that
have to do the actual video work.

We do have the space in our database to
be able to incorporate that going forward.

And so, my vision of the product, you
know, a year or two down the road is

gonna be one where you can do a lot
of reviewing of the space visually.

Economically, uh, you know, sort of
texturally, uh, before you actually have

to go out and look at it physically.

Kevin Horek: Nope.

Makes a lot of sense.

The other thing that I thought was
helpful, and that is you provide a market

report based on the location that I'm
looking at, because like, like I said

earlier, like I think obviously like
there's areas that I would want to be in,

but there might be adjacent areas that
are maybe a little bit more expensive,

and I'm saying, yep, that's fine.

I'm willing to spend a little bit more.

Or, you know, if I go a block
or two over, I can save, you

know, X amount of dollars, right?

And so, The fact that you've provided that
research and about the area, I think is

Michael Colacino: actually
really useful too.

Yeah.

I mean, you can draw a, a, a polygon
around a particular area and find

everything that's in it, which seems
like a perfectly intuitive way.

That's the way people think
about neighborhoods, right?

You think about them in terms of their,
of their borders, of their delineation,

and, uh, You know, it's so strange
that our industry has this very basic

ideas of how people would cognitively
engage with a search like this.

And yet that's not how we do it.

Because if you called a traditional
brokerage, including the one I used

to work for, their first approach
would be like, well, we don't

want you to really look at space.

Let's have a meeting first.

Let's sit down and talk about
your requirements and get to know

you and so forth, which is really
very focused on the broker's needs

and not on the tenant's needs.

You know, that's about me getting
something from you, which is your

attention and your physical presence.

In my space, what we do instead is we sort
of say, okay, you're thinking about this.

How can we help you think about it
and what you're saying, which is the

ability to define a poly line and say,
okay, show me everything that's in here.

Uh, is a really basic tool that
you'd think everybody would

provide as a first step in the
process, but nobody does except us.

Kevin Horek: Sure.

No, that makes a lot of sense.

The other thing that I think a lot
of people like about one of the.

Very few pros things that came out
of kind of the working from home

thing is not having to commute.

But you guys actually have a
commute calculator, which I

thought was kind of interesting.

I, and just as like, when you're doing
research, right, I, I think that's

actually quite, quite fascinating.

Do you wanna maybe elaborate

Michael Colacino: on that as well?

Well, yeah, I'll say, I'll say
sort of two things about it.

One is that, as we really are,
as we are realistic about what's

happened with working from home.

We realized a couple things.

One is what I said before, which
is that people really don't like

the way that their space works.

But the other thing is we realize is
that people really hate their commute.

Sure, yeah.

And I don't, I don't know that,
that, that's sort of a genie that's

been let out of the bottle, and I
don't really have an answer for it.

Like, if you have an hour and 15
minute commute, commute from New

Jersey into New York City, I, I just
can't imagine how miserable that is.

First of all, . Fair enough.

So, you know, and if you don't have
the money to be able to move into the

city and be close to your job, like I
really understand that as a motivation

for people not wanting to, uh, being
more interested in working from home.

And I don't know quite what we're
gonna do about that because it's, it's

a weird thing because the less money
that's spent on public transportation,

you know, less fairs that people
do, the worse it's gonna get.

Yep.

So we have, we're kind of trapped
in a little bit of a, you know, a

macroeconomic box here, which is as
people flee the city and they stop.

Uh, paying tax, you know, supporting
businesses that pay taxes and they

stop taking rides on, on the subway,
you're gonna find that the subway's

gonna get a lot worse, not a lot better.

So I don't know how that all
works itself out for big cities,

but it's definitely a challenge.

But the other thing about the commute
that's important is that it's really

heterogeneous in the sense that different
people have different reactions to it.

Some people kind of like being on a train.

It was a, a way of putting, um, a sort
of a period on the end of your day.

Uh, and, but the thing is that
that's sort of a, a man in the gray

flannel suit, which is a movie about.

People in 1950s that worked
for big corporations.

It's sort of a way of thinking
about it that I don't think

the millennials really share.

So the idea of the commute as a, as a
valid and a, and a life-affirming part

of your day, I don't see that people in
their twenties really look at it that way.

And so I think we really are gonna have a
serious challenge, uh, sort of a, an urban

geography challenge about where people
are gonna live and how they're gonna work.

Because I just don't think anybody
that's gotten used to not having that

commute is gonna be easily drawn back
into an office no matter how nice.

Kevin Horek: Yeah.

No, that's, that's fair.

That's, yeah, that's something
I've been wondering as well.

Um, no, it, and I'm, I'm sure you
guys will figure something out.

Michael Colacino: Well, at the minimum,
it's good to be able to know how long

it's gonna take and be able to do your
planning and, and look at your employees

and say, well, how long is it gonna be for
our Brooklyn employees to get to the west

side versus the east side of Manhattan?

Or, how long is it gonna take for our
LA employees to get to, uh, Westwood

from, from Hollywood and, and so forth?

It's, it's very useful to be able to
have at least the data so that you

can make an informed choice, because
it's gonna become a flashpoint between

management and employees over time.

So I think we're a little
ahead of the curve on that.

Yeah, no,

Kevin Horek: totally.

So if I own a building or multiple
buildings, how do I actually get

my properties onto square foot?

Michael Colacino: Yeah.

It's a little bit of a, an inverse
question, which is it's how does square

foot get the information about your
building to, to onto our database.

Okay.

I would love it if every landlord said,
that question that you just asked.

Uh, unfortunately, landlords
are very successful.

They make lots of money, and their core
business is not database management.

It's, uh, renting space and, and
improving their, their building.

So the industry has been extremely slow
in developing any kind of standards

for transmitting, listing information.

To the individual companies that use it,
to the brokerage companies that use it.

There's a company called CoStar, which
is a, uh, a publicly traded company

whose exclusive business is in, uh,
is getting the data from landlords

and putting it onto a system that is
proprietary that they will license to

you, whether you're a broker or whomever.

So the issue for us is, given that
CoStar is what it is, landlords

haven't really figured out how to
provide a publicly accessible feed

for how their, uh, space looks.

So that will happen over time.

That's another one of my, my do you
believe this in the future questions,

which is eventually every landlord will
realize that having an a p I that allows

people to tap into the database of their
buildings and get all the available space

out of it is in their interest to do that.

Unfortunately, in today's world,
it's, uh, it's not quite that.

So we have three tools that we use.

In order to gather that data.

The first is we have a series of scrapers
that go out on the internet and scrape

information off of any publicly available
site, uh, that has data about a building.

So a lot of big landlords have already got
websites that have all their listings on

it, like, uh, SL Green here in New York.

The second thing that, that we do is
that there are, there's a whole sort

of, kind of primitive industry of
creating p d f flyers that describes

space and that are sent out via email
to, uh, to various brokerage firms.

It's crazy that we're still doing it
this way, but the fact of the matter

is that these things get sent out every
time a space is put on the market.

And we receive them just like everybody.

We send them off to a business process
outsourcing group in the Philippines,

uh, and they input the data and, uh, help
build out the database with that as well.

And then the third thing we do is we
call people on the phone just like, uh,

CoStar, just like, you know, brokers do.

We call landlords and we say, Hey,
what's available in your building?

Any movement been going on
since the last time we spoke?

And that's a traditional task, uh, for
a researcher inside of a big company.

And we do that as well.

And between those two, those three
things, we get a pretty, uh, high

percentage of the space, like 90
something percent of the space in the

market located on, uh, on our system.

Interesting.

That was a little geeky.

I hope, I hope I didn't
geek out too much there.

But, uh, no,

Kevin Horek: I actually happy that
you said that because in the startup

community, I find a lot of people think
that they need to build everything with

software and that nothing could be manual.

And I get that sometimes.

In your case in point,
you don't have a choice.

There is no a p i to connect
to every building on the

planet and pull their listings,

Michael Colacino: right?

That you have to

Kevin Horek: do this stuff manually.

And yes, you are trying to use
technology to automate as much of this

as possible, but I think that's such
good advice that you as a company that

have been around a number of years
and have built a bunch of technology,

still have to do some manual things.

And I, I think that's,

Michael Colacino: that's amazing.

One of the things we did though is we,
we did learn, uh, some stuff from, from

other companies, which is that if you
think about calling these buildings

and getting data, it's sort of like
a call center type activity, right?

So one of the things that our tech geeks
did early on is they, uh, developed

an internal call center product, which
essentially allows the researchers

to scroll through all of the listings
that they need to validate and do a

lot of them in the course of a day.

The same way that a call center person
would, uh, would make a lot of calls, and

it's not a particularly glamorous job,
but we do use some level of automation

so that it's, it's done efficiently as
opposed to just like literally pulling

out, uh, you know, going on the internet
and trying to look for telephone numbers.

Oh, that's smart.

Kevin Horek: Interesting.

I think that's really good advice.

So then how do you monetize square foot?

Michael Colacino: Well, it's, it's
really pretty traditional brokerage.

Uh, at the end of the day, um,
commissions are paid, uh, their

percentage of the rent and, uh,
the industry's a little odd because

it's paid typically by the landlord.

And there's a whole series of reasons
for why that's been a tradition

and, and the way that things work.

Uh, and so, um, it's really an, in some
ways on the, on the revenue side, it's

like a traditional brokerage company.

The only difference between us and a,
and a traditional brokerage company

in that regard is around a third
of the revenue that our brokers

generate is generated by the website
is generated by square foot.com.

So they bring their own business and
their own methods of, of finding,

uh, clients and opportunities.

But we also provide them about a third of,
of their business through the platform.

Um, but generally speaking, it's a
brokerage company that is tech enabled.

Got it.

Kevin Horek: Interesting.

No, I, I think that's, that's fascinating.

So you quickly covered it,
but I wanna cover it again.

, maybe do you want to give us the
locations of where people can actually

use square foot.com to actually
find office space, uh, these days?

Michael Colacino: Sure.

So, uh, as I said, we have five offices.

We're in Los Angeles.

Uh, we are in Houston, Texas, and
we are in Nashville, Atlanta, and

our largest offices in New York.

And our plan over the course of the
next year is to open about half a dozen

additional offices and to really begin
to become a national brokerage company.

And the theory of where we open is any
place that has an N F L team, , we,

we find to be a good place to open.

So if you've got an F NFL franchise,
where on our way to open, you

know, in a, in a city near you.

And, uh, because all of those
cities are large enough to have a

significant amount of, um, of real
estate transactional activity go on.

So I don't know which ones
they're gonna be because we

drive everything off of people.

Uh, so what we'll do first
is we'll find a, a human who

is good and does a good job.

And then the beauty of the way
that Jonathan built the platform

here is that we can expand into a
new market in a matter of months.

And my old company, it took us almost
two years, 18 months to two years

to get started in a new market.

And here we can be generating
revenue and, and, um, and up and

operational in about 60 days.

So that's an advantage of the platform
and the technology because we build the

database first and then we start handing
leads off to the people in the office.

Uh, the second, you know,
that they start basically.

And also we are pretty new age in how
we think about office space, which

is that, you know, it's inexpensive.

We don't have a lot of
administrative assistance.

Uh, we're very lean and mean like a
typical startup, uh, which means that

we can create profitable offices without
having to go through a lot of build up.

. Interesting.

Kevin Horek: No, and I, I actually
think that's really good advice in

Michael Colacino: itself, right?

Yeah.

Well, I mean, you, you know, the
dogs have to eat the dog food.

That's one of the things that Microsoft,
uh, that when I used to work, uh, at

Microsoft, I had a, a relationship with
them as a broker for many years, and

they would say, you know, you gotta use
Microsoft products to do this stuff.

It's like, we want it as a PowerPoint
presentation, not as a book.

And so, uh, they would always say
the dogs have to eat the dog food.

Kevin Horek: Oh, that's,
that's really good advice.

Is there any other advice that you
would give a startup or an entrepreneur

or, you know, whether they're in
the real estate space or not, that

you've learned over the years?

Michael Colacino: Whew.

That's a, that's a broad question.

Um, what I'd say to the PropTech industry,
my advice is this too shall pass.

Everybody's gotta buckle their seatbelt
because the next couple years are

gonna, are gonna be tough because of the
recession and the capital markets, uh,

and the shortfall and available capital.

So everybody's gotta realize that the
future is gonna be in PropTech and

not every company's gonna make it.

But at the end of the day, in 10
years, the entire industry will

be technologically sophisticated.

Maybe not like Wall Street, but it'll be
a hell of a lot more sophisticated than

it's been over the last couple decades.

So I would say keep your chin up.

Um, PropTech will rule.

It's just gonna take, uh, it's gonna take
a couple more years before we get there.

That would be one piece of advice.

Uh, in terms of people who are
starting their own business, um, you

know, I'm gonna give very contrary
advice to what a lot of brokers

would do, which is, I say, I would
say that flexibility is everything.

It's got an optionality
that's of incalculable value.

So you should press your real estate
provider, your broker, and say, how

much flexibility can I build into this
lease and how much is it gonna cost?

And if you don't have answers to
those two questions, then you're

really missing the point, in my view.

Um, because what the broker will
say is, well, you know, landlords

really like to do five year leases
or 10 year leases or, or whatever.

And my perspective on
that is I don't care.

I mean, I care what's useful for
the tenants that we represent.

And I don't really care if a
landlord has a bank that'd like

them to have a 10 year lease.

What I care about is what is the
optionality that I can build into a

transaction that'll make a company
that doesn't quite know where it's

gonna be in a year or two successful.

No,

Kevin Horek: I, I think
that's really good advice.

So how about we close the show with
mentioning where people can get more

information about yourself, square foot,
and any other links you wanna mention?

Michael Colacino: Sure.

Well, square foot.com, that's, uh, that's
the heart and the soul of the whole thing.

Uh, I'm on LinkedIn, so if anybody wants
to find me, they can find me on LinkedIn.

And, uh, I have many, many,
many LinkedIn contacts.

I'm happy to have more,
especially if you're in our space.

Um, and I'm out there on Twitter,
although I mostly talk about the

New York Rangers, a big hockey fan.

I'm sure coming from Alberta, you are too.

Um, I've been a lifelong Ranger fan, so
most of my Twitter feed has to do with,

uh, criticizing other hockey teams.

Um, but uh, I'm not there on,
on social media, so people

can find me pretty readily.

They look for me.

Perfect.

Michael, well, I really appreciate

Kevin Horek: you taking the time
and your day to be on the show, and

I look forward to keeping in touch
with you and have a good rest of your

Michael Colacino: day.

Great.

Same to you, Kev.

Thank you.

Okay,

Kevin Horek: bye