Beyond the Box – Season 1 – Episode 1 – Mark Birschbach – Senior Vice President of Strategic Business Innovation and Technology with National Association of REALTORS®

The Season Premiere of Beyond the Box is finally here featuring the Senior Vice President of Strategic Business Innovation and Technology with National Association of REALTORS®, Mark Birschbach!

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Listen on Google Play:
**Will be coming to Google Play soon**  

In our Season Premiere, Lynette Keyowski sits down with Mark to discuss the founding of REACH and what the NAR future has in store.

“That’s very much the goal is to have a proactive approach to innovation and how things will change over time, and ultimately where our member sits in the relationship with the consumer and to the transaction. Making sure that, as their role has to evolve over time, based on how consumer preferences are evolving over time, that they are positioned to be successful and that’s why we’re here and why we do what we do.”

Full Transcript of the Show

Lynette Keywoski – Beyond the Box Host: We are here today
with the senior vice president of strategic business innovation and technology.
Did I get that right? 

Mark Birschbach – Senior Vice President, Strategic Business
Innovation and Technology, National Association of REALTORS®: Yes. 

Lynette Keywoski – Beyond the Box Host: Awesome, with the
National Association of Realtors, Mr. Mark Birschbach. Welcome! 

Mark Birschbach – Senior Vice President, Strategic Business
Innovation and Technology, National Association of REALTORS®: Thank
you.

Lynette Keywoski – Beyond the Box Host: It’s great to have
you Mark. I’m really excited to have you as our very, very first guest on the
Beyond the Box podcast. We wanted to put this podcast together for a couple of
reasons. Up here in Canada, there isn’t really a voice, a commentating voice of
the real estate industry, but especially the real estate technology and capital
at that intersection. I couldn’t think of anybody better to bring on as our
first guest than you, because you’ve really been championing exactly that down
in the US on behalf of the NAR and it’s venture arm on Second Century Ventures,
which I want to hear a bit more about in a second. So, thank you for joining us
and I’d love to start right there. We’re recording this during this weird
pandemic time, so of course we’re both at home and we’ll talk a little bit
about that. But before we get there, I’d love to hear just a little bit about
your origin story. Where you sort of came from in the industry and how you
landed in the spot you are in now. 

Mark Birschbach – Senior Vice President, Strategic Business
Innovation and Technology, National Association of REALTORS®: Sure,
that’s a good place to start. I actually started my career on wall street. I
was an investment banker, doing mergers and acquisitions in New York City. I
joined wall street in the late 90’s which was really the first tech boom when
we were seeing the Nasdaq 5000. So, I really gravitated towards working on
technology transaction which is when I really started to get passionate about
innovation, technology, and things like that. But I was really looking at it
from an advisory perspective, or a financial perspective, as well as a strategic
perspective. What companies made sense to combine together, create synergies,
etcetera. So, I did that for almost a decade, and then I had moved to Chicago
in the meantime, and when the financial crisis hit,  our firm was really
consolidating offices back into the New York area, and I wanted to stay in
Chicago, so I actually left banking and found myself in the start-up world. So,
I actually joined a technology start-up really early stage; we hadn’t really
raised much capital, but our main product was a web marketing platform that we
were selling to realtors. So, I got my indoctrination into real estate as well
as what it was like to be a start-up tech entrepreneur. What I realized about
real estate, the really hard way, was it’s incredibly complicated, and we spend
a lot of time, a lot of capital, trying to figure out who is our customer and
how should we be targeting them and what was the difference between the
association world, and the brokers world, and how did the MLS system all play
into that. And as a tech entrepreneur, it’s incredibly challenging to figure
all of that out and to navigate through that which that, combined with it being
around 2009-2010, one of the worst real estate markets in history given what
had happened. It was really challenging for us to get that business to work,
but it really opened the door which was an opportunity for me to join the NAR
in 2013 and help launch our REACH program. So, I had a really good financial
M&A background, I had, I’ll say, dabbled in the start-up world as a
start-up entrepreneur myself, and happened to be working in the real estate
industry from a tech entrepreneur perspective. And that experience made me the
perfect fit to come work for the NAR to use those resources to help companies
be successful in this place. So, I joined NAR in 2013 when we founded and
launched the first REACH class, the first REACH program. 

Lynette Keywoski – Beyond the Box Host: Awesome, awesome.
So, tell us a little bit about REACH; it’s genesis, what the purpose was, and I
know there’s a bit of a step before REACH happened, so Second Century was to
that, which would have been before your time with NAR, but I’d love for you to
kind of weave those pieces together as well. 

Mark Birschbach – Senior Vice President, Strategic Business
Innovation and Technology, National Association of REALTORS®: Yeah,
for a very large trade association to have a venture capital arm, is pretty interesting.
Pretty amazing, actually. The story of Second Century Ventures even goes a
little bit farther back when a guy by the name of Scott Fisher came to NAR in
the early 2000’s with an idea for a lockbox company. Which has now been very
successful; it’s a company wholly own called Centralock. But it was his idea to
approach the NAR and say, “I need capital to start this business. Your members
are getting price gauged by a competitor in the industry who sort of has a
monopoly in the industry.” And the NAR’s response back to him was, “Well, we’ll
promote your product, this is how much we’ll charge.” It was a marketing and
advertising relationship. And he sort of flipped it on its head and said,
“Well, no I’m looking for you to give me money to invest in my company.”
Thankfully Bob Goldberg and the senior management and leadership at the time;
this is a really interesting concept to get into at the time – to start getting
into backing companies that can help support our members. So, that was really
the first, call it, transaction that the NAR did. And what they realized
through that process was that with a lot of committees and a lot of red tape
and to get something like that through that entire system was really
challenging. And it took a really long time. If you want to be in the venture
capital business, you need to be able to move quickly. So, that was the idea
behind creating Second Century Ventures as a wholly owned subsidiary with a
separate board that could move really quickly when opportunities came to the
table. So, as part of NAR’s Second Century Initiatives in 2008 to launch the
entire association into its second century of existence, they created Second
Century Ventures which is really our venture capital arm where we take
investment dollars, or capital, and invest that into technology companies that
can help our members. So, that was launched in 2008, made its first investment
in 2009 into a company called DocuSign. Which not many people have heard of at
the time, but now many, many people are using it and have heard of it. So, that
has been a huge success story for the fund, but as it evolved over time, we
realized that we were missing out on some earlier stage companies that we could
help bring into the marketplace that could really help our members. So, when
Second Century Ventures was founded, the board had a pretty strict investment
criteria. We couldn’t invest in any company that didn’t have at least 2 million
dollars in revenue, or a significant customer base. It was a way they wanted to
manage risk associated with where they were investing their dollars. What we
realized that we were missing a lot of opportunities, so there were earlier
stage companies coming to the table and we had no vehicle to really partner
with those companies. So, we got the idea to start REACH, which is more of a
programmatic experience for typically an earlier stage company but the way it’s
evolved over the last decade now, is we actually get later stage companies, or
start-up companies with a lot of traction in other markets who really want that
programmatic experience to help launch themselves into real estate. So, it’s
really evolved over time with that very early centralack investment that
ultimately paved the way for Second Century Ventures to exist, and now REACH to
exist which, I mean we just launched our eighth core REACH class. We’ve
expanded that program significantly and it’s bringing a lot of value to the
table for our members. 

Lynette Keywoski – Beyond the Box Host: I love that you
waved the story that way. I just learned now why it’s called Second Century
Ventures, so that’s a very cool little tidbit of information to have. I know
I’ve had a lot of people ask, “Why Second Century Ventures?” so now we know! 

Mark Birschbach – Senior Vice President, Strategic Business
Innovation and Technology, National Association of REALTORS®: I know! 

Lynette Keywoski – Beyond the Box Host: Launching realtors
into their second century, so that’s really awesome. So, the REACH program is
reaching its eighth cohort in the US, so obviously it has been an extremely
successful program. Can you give us just a few metrics around historically what
that portfolio looks like, how it’s performed, and how Second Century measures
the relative success of the program and why it continues to invest and expand? 

Mark Birschbach – Senior Vice President, Strategic Business
Innovation and Technology, National Association of REALTORS®: Yes,
absolutely. I mean, we really look at two major criteria when we’re looking at
partnering with any company. First and foremost, what is the value that it can
bring to our members. So, what products, what service, what pain point is it
trying to solve, what does the marketplace look like, how will it help our
members be more successful. That’s first and foremost the number one criterion.
Secondly, and I think them really more as 1a and 1b because they’re both very
important, is we track and measure financial success, or ROI on that
investment. It could be the greatest product in the world, but if it’s not
going to get traction, or the company isn’t going to do well financially, then
it’s not something we would put our equity or dollars behind. So, we really
look at those two criteria. In 2013 we launched our first class with seven
companies. We typically have anywhere from between seven and nine companies in
the REACH program each year. And then we’ll do follow on and investing in a
handful of companies from each of those classes, depending on how successful
they are. 

Lynette Keywoski – Beyond the Box Host: Awesome, so what is
the portfolio size of NAR, so seven to nine must be somewhere around, 70 to 80
companies that have gone through the reach program? 

Mark Birschbach – Senior Vice President, Strategic Business
Innovation and Technology, National Association of REALTORS®: So, last
year, almost two years ago, we actually acquired a local accelerator which we
modified and turned that into our commercial program, which we just launched
our second cohort this year that our commercial technology real estate
solutions. So, if you include that portfolio that we acquired which includes
twenty-some companies, the total SCV and REACH portfolio is over 100 companies. 

Lynette Keywoski – Beyond the Box Host: Amazing. So, really
expansive traction across the up and coming tech that is supporting the real
estate sector. 

Mark Birschbach – Senior Vice President, Strategic Business
Innovation and Technology, National Association of REALTORS®: That’s
right. 

Lynette Keywoski – Beyond the Box Host: So, the other piece
that I was hoping you could talk to us a little bit about is sort of the vision
for moving forward. So, the REACH commercial program I know was an initial
opportunity to expand the original concept, but there’s also been more move to
expand, not just REACH. So, I’d love you to talk to that point and sort of in
conjunction with that, how that fits into, and I want to weave back into your
particular role, in terms of strategic business, innovation and technology, and
maybe how the REACH program is helping to check some of those boxes from an NAR
perspective. 

Mark Birschbach – Senior Vice President, Strategic Business
Innovation and Technology, National Association of REALTORS®: There’s
a lot in that. So, let me talk about REACH, first of all. So, we’ve expanded
REACH quite a bit. Significantly. We really looked at three different
strategies which are in various stages of being executed, so there’s a lot of
innovation happening around real estate and around real estate transaction and
places where we can help our members be more successful if we help innovate
those areas. So, the first strategy in which the commercial expansion really
fit into was what we call our “vertical strategy.” So, what our real estate
adjacent industries or areas which impact real estate transactions where we can
invest in, help innovate and make things easier and more productive for our
consumers as well as our members. So, think things like mortgage technology and
insurance technology and settlement services technology. And commercial real
estate technology which is actually quite a bit different from residential. So,
we include commercial as another vertical even though it is real estate
transaction focused. So, we’ve had companies who maybe were more focused on addressing
those specific verticals that have tried to, with varying degrees of success,
tried to come through the REACH core program, and we realized that we have an
opportunity too, as we expand and grow, to tailor something better for them so
that they’re getting a lot of value out of it, as well as our members are
getting a lot of value out of it. So, our first vertical is really our
commercial vertical, which we’re focused on trying to make successful. But we
are looking at other verticals for future expansion. The second major growth
area, which we’ve gotten a lot of traction in is our global expansion. So, this
really came about because we had international companies who were looking to
participate in REACH to open up their US markets.  So, the very first company
that we had was a German based company which was a number one player in Europe,
that was looking to expand into the US. They opened their first office and
realized, “Wow this is a lot different than Europe. How do we figure out how to
trade the United States?” So, I was introduced into them and we had this great
opportunity to bring our first international company into the US using REACH.
Well, that sort of gave us the idea that innovation is happening everywhere,
not just in the United States, and how can we go and find international
companies that we can bring into the US that can help our US based members. And
so, what we started doing last year is we launched our REACH Global effort with
our first cohort in Australia. We had four Australian based companies come into
the US via REACH in 2017-18. So, there’s a lot of similarities to the United
States real estate market and Australia so it seemed like a natural place to
start. So, we’ve since announced that we’re going to do REACH Canada this year,
we’ll do REACH UK this year, and then obviously REACH US, with the idea that,
let’s go find innovation that’s happening everywhere and get involved in that
through these bi-lateral partnership agreements that we have with, let’s call
them sister organizations in real estate in those countries. We have a natural
connection there. And then we have significant connections in the international
technology and venture capital communities where we can go find the best and
brightest companies, run them through these, call them local programs, to those
countries and then when they’re ready to come into the US they’ve got some
traction in their own space, in their own location and we can help them do
really well in the US. And I think further down the road and now having this
portfolio of let’s call it, one hundred companies, as they saturate the US base
real estate market, maybe get into some of those additional verticals by
expanding their products and solutions across some of our vertical programs
that are looking to grow their businesses beyond the US and get into some of
these countries where we’ll already have a systematic way to launch them into
those companies like we did for them in the US. So, that was really the vision
around international expansion is, innovation is happening everywhere, and
let’s bring some of that to the table for our members. 

Lynette Keywoski – Beyond the Box Host: That’s awesome. So,
you’ve mentioned three strategies – vertical specific, global expansion, is
there a third? Or was that woven into the last? 

Mark Birschbach – Senior Vice President, Strategic Business
Innovation and Technology, National Association of REALTORS®: There is
a third, which we are still working on and have not disclosed yet, but there is
a third strategy that we’re looking at. 

Lynette Keywoski – Beyond the Box Host: Cool. So, I hear a
second podcast coming up in the future. 

Mark Birschbach – Senior Vice President, Strategic Business
Innovation and Technology, National Association of REALTORS®: Yes! 

Lynette Keywoski – Beyond the Box Host: That’s awesome. I
love that. I love that one of the things that I’ve had the opportunity to see
is sort of this global interest in the REACH program which speaks really highly
to not just the quality and the caliber of the program, but the reach of the
program around the world; Pardon the pun, but already how successful some of
those companies have become because of their participation in REACH programs.
So, I love the wider vision to sort of behold technology without borders
approach. So that there’s an opportunity you expand that value around the
world. I love that. 

Mark Birschbach – Senior Vice President, Strategic Business
Innovation and Technology, National Association of REALTORS®: And that
fits in really well with the overall strategy of the strategic business,
innovation and technology group of which Second Century Ventures are a key
piece of, but they really fit in the middle of what I call the value chain. So,
if you think just in their purest form, REACH as an early stage company, we’d
partner with them in their early stage, they grow and then maybe we invest in
them from  Second Century Ventures as they grow and they start to fit into
that investment criteria. While we’ve been incredibly successful in that band
of companies, there was work to do around how about if we went up the value
chain to what we call our bay-tech initiatives. Which is what is our
conversation and relationship with some of these really large companies like
Google, Facebook, Amazon, Microsoft. You could go down the list, and how does
the NAR work with those companies to make sure that if they want to do
something in real estate, that they do it in a way that is beneficial to our members
as opposed to detrimental. So, we really started to open up a lot of dialogue
with those companies and we’ve had a number of different avenues within how we
go about creating relationships with them, whether that’s a straight up
marketing relationship. I also oversee the realtor benefits program which is a
program where we partner with as large as fortune 100 companies that are
looking to bring a valuable product or services to our members at a discount
for our members so they can take advantage of it. You know, so there’s
marketing and advertising relationships that we can have, there’s corporate
development, so let’s look at this 100 company portfolio of yours and look at
what you’re missing and what we can fit in with what we’re doing and maybe it gives
us a toe-hold into real estate and that’s an interesting conversation to have
at the corporate development level. Then I’ll go all the way down the value
chain to the really early stage raw, pure technology. So, think of things like
Artificial Intelligence, and Machine Learning, and VR and AR. 

Lynette Keywoski – Beyond the Box Host: Blockchain. 

Mark Birschbach – Senior Vice President, Strategic Business
Innovation and Technology, National Association of REALTORS®: I try to
not list that one, because it’s a little bit ahead of its time as far as having
practical applications that make sense, but we are certainly incredibly
involved in Blockchain and how it can and will potentially affect real estate.
But yes, perfect example. I have a team of emerging technologists whose sole
focus is identifying and researching those kinds of technologies and going out
and having those conversations with the people who are funding development of
that. And a lot of that funding and development is happening, yes in the
start-up world that we have a pulse on from a REACH and SCV perspective, but
there’s a lot of funding at again, big corporations or government institutions
or academic institutions that are doing a lot of research and development
around different technologies. Our goal is to be on the forefront of that, be
involved in where those conversations are happening, and thinking many steps
ahead of how this can and ultimately will affect real estate, consumers, our
members, and be early in those conversations. And a lot of those conversations
tend to really feed what we’re doing into REACH. So, you think about the
evolution of a company starts with an idea, maybe with an underlying
technology, it becomes a really early stage product that is going to evolve
over time, and maybe it gets some traction, it gets some traction in real
estate. It makes sense for that company to go through REACH, we invest in it
out of SCV, and the company is on its way. So, where I want to be is in really all
levels of the conversation from super early stage, raw technology, to all the
way to huge multibillion, even trillion-dollar big tech company. And this new
group gives us the ability to do that. 

Lynette Keywoski – Beyond the Box Host: I think it’s
amazing Mark the way you’ve sort of woven out that picture of the value chain.
I think it’s really important to know that NAR as the largest, one of the very
largest trade associations, is really positioning itself strategically and
purposefully. But also, in a very meaningful way in every aspect of what I
would call, almost that virtuous circle that you’re creating, right. So, you
know, there’s the chain concept where you invest kind of in the middle stage
and hope you can extrapolate to the end piece of the value chain, but really
what you’re doing is feeding that system, you’re really creating the entire
ecosystem, and I think shaping that entire ecosystem for the future of the real
estate practitioner for certain, but by virtue, making certain that you are
impacting all aspects of that real estate ecosystem, not just the transaction
on the ground, not just with finance and mortgage. And so, I think it really
shifts the dialogue to the real estate industry driving more of what the sector
looks like, rather than sitting back and passively accepting what the sector
becomes and then reacting to it. I think that is an amazing path forward. 

Mark Birschbach – Senior Vice President, Strategic Business
Innovation and Technology, National Association of REALTORS®: That’s
very much the goal is to have a proactive approach to innovation and how things
will change over time, and ultimately where our members sits in the
relationship with the consumer and to the transaction. Making sure that as
their role has to evolve over time, based on how consumer preferences are
evolving over time, that they are positioned to be successful and that’s why
we’re here and why we do what we do. 

Lynette Keywoski – Beyond the Box Host: Love it. So, I want
to be conscious of your time, because I just want to note, that we’re actually
recording this in the middle of the unprecedented virtual mid-year meetings for
NAR, and I know that you have a lot of things to do, so I just have to more questions.
One more question, then a “let’s leave it at that” question. So, we are
recording this during legislative week, or make your legislative meetings week
for NAR, but also the Covid pandemic. So, we can’t not address that in the
context of this conversation. So, I’d love to hear a little bit from you or
more specifically how NAR is approaching this period of time in the context of
that innovation sort of agenda, and how you think that may shift the thinking,
where you think the shifts might happen, does it impact what Second Century is
investing in? Really, wide open field here for you to address that! I think
it’s anybody’s guess, but I’d love to know what your current thinking is. 

Mark Birschbach – Senior Vice President, Strategic Business
Innovation and Technology, National Association of REALTORS®: Yeah, I
mean this is obviously been a pretty significant curve ball, in any industry.
Real estate for sure. I think what its really highlighted, really in any
industry, is how can you be productive and get things done when you’re not able
to meet face to face, or you can’t be in the same room, or if you’re in the same
room, you have to be a safe distance apart. You know, we’ve been fortunate and
working really hard to follow consumer preferences for digital transactions and
eliminating a lot of the potential face to face interaction, just from a
convenience perspective. While that idea has been super charged when people
can’t meet face to face. The companies that we have invested in, over the last
5 to 6 years that do anything to try to mimic a face to face relationship or
experience digitally or virtually are getting significant traction. All of the
digital transaction tools like esignature and remote notarization and things
like that are getting significant traction because people can’t physically get
together. So, luckily, we were on the forefront with a lot of those
technologies; we already had them in our portfolio, those companies were
getting a lot of traction already just due to consumer preference in
convenience. You know, not being able to be in a place. And we’ve seen through
this, I think some of the slower to adapt those technologies or prefer those
technologies now can’t get enough of them. Because they can’t do business
without them, so I think it remains to be seen as we come out of this; what is
the new normal? I think obviously these companies were very well positioned,
for lack of a better world, take advantage of a situation like this. But I
think this will impact how business gets done in the future and the more people
get comfortable with the tools that the technology tools that they can use that
were just a convenience from a convenience perspective, are now really being
looked at as a safety perspective were well positioned. NAR is doing a lot to
help our members navigate through this. There are business challenges. There
are safety challenges, there’s regulatory and legislative challenges and we
have been working around the clock to help address all of those things for our
members. 

Lynette Keywoski – Beyond the Box Host: Awesome, very cool.
I’ve been watching it and I’ve been seeing it through all of the news channels,
how much NAR is doing to and it’s one piece we haven’t even touched on, but the
intersection of advocacy and technology and how well situated NAR is to
facilitated some of those changes that have prevented tech from evolving just
because of the regulatory barriers. Again, for another podcast! So, Mark, thank
you so much, I really, really appreciate you doing this. I think how you and
the team at NAR have set up the SCV and the REACH initiative are going to speak
volumes in the future. I am actually really excited about what this period of
time offers for those initiatives, but they will only be successful because of
the foundation that was set up. So, kudo to you and the team for doing that.
Best of luck with the rest of the legislative meetings and hopefully we see each
other face to face and in person before this time next year. 

Mark Birschbach – Senior Vice President, Strategic Business
Innovation and Technology, National Association of REALTORS®: Hopefully,
I agree. Thank you very much for having me. Happy to do it! 

— End of Podcast —

Beyond the Box: Conversations with real estate executives, venture capital partners and technologists on what lays ahead for the real estate industry in a world after COVID-19.

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