Raised in the Chicago suburb of Glencoe, Bobby Goodman, 39, jumped into the world of real estate startups after working as a commercial broker for a little shy of two decades.
He co-founded Truss alongside three technologists, one of whom was a long-time client, in 2016 to serve small and medium businesses by building an online listings platform. Truss features office properties in Chicago, Dallas, Austin, Houston, Washington, D.C., Miami and San Francisco; retail listings in Chicago and the D.C. area; and just last week launched industrial listings in Chicago and Dallas.
The online platform incorporates artificial intelligence in the form of chat bots and includes virtual reality tours of properties when landlords choose to opt-in to the service.
One year into operations, Truss has raised a total of $9 million in Series A funding and claims its listings represent 200 million square feet throughout its seven markets. Within Chicago, the company claims its listings covers 90 percent of the city’s available commercial inventory.
Before Truss, Goodman was a vice president at JLL in Chicago and previously worked at Mark Goodman & Associates and Colliers. He got into the real estate game after completing a pre-med program with a focus in behavioral neuroscience from Colorado University at Boulder. The Real Deal caught up with him long enough to ask 20 questions about Truss and what makes him tick.
What’s your elevator pitch?
Truss is a technology-enabled leasing transaction platform that uses artificial intelligence and virtual reality to streamline the leasing process for [small and medium businesses] looking for office, retail and industrial space.
How did you get the idea to do this?
The idea came to me by way of my background. Before I started Truss, I was a commercial real estate broker for about 17 years; I was a tenant representative. I started to notice the way my younger clients wanted to consume their data and that’s what kinda got the gears turning a little bit; how could we create a platform that would give tenants the ability to find everything they need instantly and in real time, while, at the same time, giving landlords the opportunity to market available spaces directly to those tenants.
Can you tell me the story of how you founded Truss? Did you just quit one day?
Yeah, I did. So, there are three other co-founders and one of the co-founders, a gentleman by the name of Andy Bokor, was the founder of a cyber security company called Trustwave. They were a client of mine for about a dozen years and Andy and I did probably over 75 transactions together around the globe, so we built a pretty strong relationship. I brought this idea to him as he was in the process of selling his company, so the window of opportunity opened up. We came together and started working on it, then he brought in the other two co-founders, Tom Smith and Marshall Hudes, whom he had started and sold a couple of previous companies with. They’re a really well-rounded, seasoned veteran team of professional technologists and then I’m the subject-matter expert.
How big is your team?
I hesitate to give you an exact number because it feels like it’s starting to change everyday. We have a few more starting in a few weeks, but we just crossed the 30-person mark.
Why did you call the company “Truss”?
A truss is an architectural element that supports a structure. So it’s kind of a play on words because our platform supports a leasing transaction the same way a truss might support a roof.
Who came up with it?
Unfortunately, none of us. We all had horrible names, so we had to work with some friends in branding to come up with that [name]. I wish I had a better story, but I don’t.
Can you walk me through your business model?
First things first, we are a licensed real estate broker. We only represent the tenants that come onto our platform–so we don’t represent any landlords–and, by marrying our in-house tenant rep brokers with the technology platform we’ve created, we represent these small tenants through the lease transaction. So all the way from the beginning of their search through to the signature of the lease. We earn a brokerage commission when the lease gets signed, and then we share 30 percent of our commission back with our client, the tenant.
What’s the average size of your commission?
Usually it’s somewhere between $5,000 to $10,000. Generally speaking, we rebate a few thousand dollars back to the tenant.
You’ve got these virtual reality videos in some of your listings, so what’s your relationship with landlords to be able to include these features?
So landlords can list their spaces and properties on our site for free and then, as a value-add service, we’ve partnered with a group called Matterport to turn-key the process of making these 3-D virtual tours. So if a landlord requests that, we shoot their space and do it for them for free.
Can you give some examples of the clients you work with?
So we have over 500 brokerage companies and owners supplying us with their available inventory in the markets that we’re in right now. So everyone from CBRE and Cushman & Wakefield to Equity Office and Tishman Speyer, to local boutiques such as Marc Realty here in Chicago.
Was it a hard sell to get people to come on your platform and try it out?
It was a hard education process to get them to understand exactly how our model fits in to the transaction because it is new. No one has really done it before. But, at the end of the day, we’re a creative and non-exclusive marketing channel for landlords, so basically the only risk they had in putting their information on our platform was the time it took to hit send on the email with their listings. There’s no cost to the landlord; no cost to the leasing agent; they get free virtual tours; and they have an entirely new marketing channel to tenants that are typically under-served by the brokerage community. So that’s a pretty big value proposition for them and they bought into it.
The industrial market nation-wide is booming and vacancy rates are plunging, so how does effect Truss as you’re launching industrial listings?
In the markets we’re currently serving [Chicago and Dallas], the industrial vacancy rate is very close to, if not at, all-time lows. Because of that when a place comes on the market, if you don’t know about it immediately, odds are it’s going to lease and you’re never going to learn about it. When you look at the types of clients that we tend to represent, you know, the smaller, privately-held businesses, up until Truss, they had to wait for their brokers to feed them information, which could take weeks. They could miss opportunities. With Truss, because we have all the data there and in real time upfront, tenants log-in and they see spaces in minutes. It gives these smaller companies an edge when looking at spaces in a hot market.
So what’s the reaction among your former colleagues to Truss? Are they looking at this and going, “Well, there goes my job?”
At first, it was like “Oh my god, the robots are coming!” But we’ve really built strong relationships with the brokerage community and that’s our goal. The brokers that we hire have longevity in the marketplace–our average broker has 10 years of experience in their respective market–and they have established relationships with brokerage and ownership groups, so there’s already an inherent trust. Since we’re focusing on the smaller transaction, we’re really a volume player and, because of that, we’re actually looked at as a welcome sigh of relief to a lot of brokers. We enable them to focus on big opportunities while we take care of the smaller transactions that really don’t move the needle for them.
Do you think ultimately your brokers will grow into taking on those bigger deals in addition to the platform?
No. We have no plans to enter the larger-transaction marketplace. A lot of that has to do with the fact that those deals are much more complex and truly take some hand-holding. It’s hard to scale a technology company if you’re focused on larger transactions with a lot of different stakeholders in the room and working those deals. It’s just too much complexity.
So what is the future for Truss?
We want to continue our national expansion and we have some markets we plan on launching later this year. We’re also starting to look at the data we’re capturing as we’re seeing a lot of activity on our platform.
Which markets are up next?
I can’t tell you, but we’re looking at four to five that we’ll be launching by the end of the year. Our first market was Chicago and we launched that just about a year ago, in Q2 2017. It’s gone very fast.
What about participating in more funding series?
We originally had not planned to go through another fundraise until sometime in 2019, however we are being opportunistic so that may result in another round of funding this year.
How much revenue are you generating now?
We don’t disclose that [information].
Turning to you, can you tell me two truths and a lie about your personal life?
I’m a sucker for animals, my heart belongs in Colorado and I’m an enormous car fanatic.
On a typical Saturday morning, what are you up to?
I go on a long walk with my dog and my wife.