5.10.23-Ecosystem-HomeRun IQ

MARC TAMRES: Well, good afternoon. And it's a pleasure to be here, and it's an opportunity to be back at MIT's campus. I have the distinct privilege of having been at MIT twice. I did a master's in engineering and an MBA at Sloan. And so my joke is that I did LFM the hard way. If I had been smarter about it, I would have done them together. Obviously, there's no one from LFM here.

So one of the things that I wanted to call out is the conversation that we're going to have is actually going to build on the prior two speakers. The issue with real estate is incredibly powerful and an important one. People may not think about it this way, but when people talk about what's going on in the economic crisis and what's going on with the Fed, what's going on with potential debt ceiling considerations, this is the biggest asset class in the world is real estate.

And we're focused on modernizing and focusing on the multi-unit part of real estate. And I want to just give a quick acknowledgment to my team that isn't able to be here. We're all based in other parts of the country and around the world. My co-founder is also from MIT. And we have several people from the MIT community, but also from real estate. And so we have a very strong team that's focused not only on the financial side, but also on the real estate side.

Let me set some context, because with regards to housing, we focus on what we call multi-unit housing. Multi-unit properties are HOAs, condos, and multifamily rentals. We essentially house in this market 50% of the population. And that's about seven million buildings. Now, to frame this, this sector of the real estate spends $7 billion to do this planning-- financial planning, basic budgeting.

And what happens? Well, 80% of those properties have big surprise expenses in three years. And sometimes they're very tragic events, which as many of you may know-- but if you're not from the United States, about a year and a half ago, there was a tragedy in Surfside, Florida. South Champlain towers collapsed. Nearly 100 people died.

And the reason for that was partially structural, but it was largely financial. They knew for three years that they had a problem. They didn't know how to pay for it. They waited three years and the building collapsed. So because of this, the regulatory environment and other environments have gotten much more difficult for properties. And this includes some of the points that were made before.

Local law 97, for example, [INAUDIBLE] and so forth are on climate sustainability. But more foundationally, a lot of the regulations in states-- Florida, New York, California and others-- are basically forcing buildings to be inspected for infrastructure.

And let me share a little secret about the real estate industry. When people do capital planning, when they do thinking of what they're supposed to spend for 30 years, they don't budget for infrastructure. It's ignored. Let me say that again. They ignore infrastructure.

So as a result, the legislatures have acted and so have the underwriters. Fannie Mae and Freddie Mac-- they have increased the capital requirements in this market. And anyone who's gotten an insurance policy in a multi-unit building or any commercial property have probably seen that the industry has raised rates nearly four to five times in a few years.

So from paying $40,000 for a building to $300,000 in a couple of years is not uncommon. And why is that? It's because of the underlying risk.

And given the complexity of this market-- and we've talked about where we're going with AI and so forth-- how have people been solving the problem today? How many of you use Excel? How many of you use paper? That is how asset management is done in this industry.

And how do they do this? They go out. They get some information. They write it down. They put it in an Excel spreadsheet. They get on a phone call. Maybe they get a fax of a quote. And then they send an email. They do a call. And then they do that again. And they do that again. And they do that again.

It's highly inefficient. And that wastes $3 billion a year. What does that mean? That's 30,000 full time jobs that people have lost because of that inefficiency.

But here's where it gets worse. People are spending $7 billion. They're losing $3 billion. And oh, by the way, they're missing $60 billion in this infrastructure costs. So when you talk about an asset class that's trying to do asset management, how do you do it when you don't understand the underlying asset?

So HomeRun IQ addresses these problems very simply. One, we address the workflow problem, which we've been talking about before as well. It's an incredibly manual process. Now, one of the things that I will share is that in real estate, it is very behind. It's going to be very difficult to go from paper and pencil to AI because the data sets in many cases don't exist. So we have a very flexible workflow model that adapts to the current needs of the industry.

Secondly, we collect the data and then it's automatically structured. There is no engineering effort. It is automatically structured in our system. And it's automatable and it's-- automatable and it's automation ready, so that the models can be run now that the data is structured.

Third, we're actually doing everything with a TCO and an ROI-based analysis. I need to go a little faster, I'm sorry-- to do a TCO and ROI-based analysis. The result here is that you can do things that are based on the economics and ultimately deliver a report that's compliant. And that's very important.

And so when you talk about compliance, we focus on the people who are doing the work, the boots on the ground, if you will-- the engineering firms and the people that have to go into the processes and into the buildings to do the work. And as a result, we've given them 50% to 90% efficiencies. They can do the work much faster. They can deliver it in a way that is much more efficient. But they can also do more of the work. And so they're getting a 10X benefit out the door. And in the market today, we have about 80% presence across the United States.

And the final part of it is that you can deliver this with information that is compliant for underwriters and for stakeholders, people that actually have to underwrite the risk. And this brings me to this point-- and we've gotten very strong signals from underwriters to say, look, if you think about it in capital markets terms, you've identified a market failure. There is no pricing of this risk that exists today in the capital markets. You now have found a way to price this risk.

And as a result, you can create new services and you can-- part of an underwriting process. You can help define what are the risks, price them, and then deliver new services in a more economic way. So with that, we are focusing on particular industries in the built environment.

Underwriters, as I mentioned-- those that are providing mortgage financing, capital market financing, but also underwriters in the insurance market, be it HOA6 or the condo insurance or commercial for multifamily. And also the built world providers-- people that are building the infrastructure that needs to go into the market and into these buildings, for example, for sustainability.

So if you have interest in these areas, we're looking to find strategic alignment and looking to have conversations about potential pilots and go to market experiments. So with that, I thank you for your attention. Please come by the booth if you haven't already, and I look forward to conversations with some of you after the fact.

[APPLAUSE]