S1E5 - Embrace, don't replace the middleman - Michael DeGiorgio (Crexi)

TS_Michael_Master

Michael DeGiorgio: [00:00:00] And I kind of, in the back of my mind, thought, "If nothing else, you know, this'll be a platform that we can transact on ourselves if people didn't want to use it."

Speaker 2: [00:00:13] Welcome to Two-Sided, the marketplace podcast, brought to you by Sharetribe.

Sjoerd: [00:00:24] Hi. I'm Sjoerd, CMO at Sharetribe, and I am your host. For this episode, I talked to Michael DeGiorgio, founder and CEO of CREXi, a marketplace for commercial real estate. This is an area, uh, [laughs] as you'll hear, which I knew absolutely nothing about, but it turns out to be an actually fascinating industry which was ripe for some serious disruption, as you'll hear.

I talk with Mike about how to build productivity tools for one side of the marketplace and also about how, instead of getting rid of the middleman, which is something that you often see when marketplaces enter a space, CREXi actually embraced the middleman. This is a really intriguing talk, and I think there are some great insights in here for anyone building a marketplace business. Enjoy.

Hi, Mike. Welcome to the podcast.

Michael DeGiorgio: [00:01:17] Hey, Sjoerd. Really nice to be here. Thank you so much for having me.

Sjoerd: [00:01:19] Yeah. I really appreciate it. Hey, before we dive super into the [inaudible 00:01:23] world of CREXi, can you tell the audience a little bit about who you are?

Michael DeGiorgio: [00:01:27] Yeah. My name's Mike. I was born on the East Coast of the United States. Started my career about 11 years ago now in commercial real estate. I started it at a company called Auction.com, where we were trying to change the way people bought and sold both residential and commercial real estate.

Uh, I was one of the first people on their commercial division, so I was really trying to take commercial real estate transactions online and to online auctions, uh, where I got a pretty good sense of the ecosystem, the software available in our space, and some of the deficiencies in our space.

Uh, I spent about four years there, had 10 different roles while I was there, did everything from broker deals to be an auctioneer on auction day, and oversaw multiple different teams, uh, during my run there. And then, left about five years ago to form CREXi.

Sjoerd: [00:02:11] All right. So there was already effectively a marketplace, Auction.com?

Michael DeGiorgio: [00:02:15] It was really just a different way to transact. It was, uh, taking the traditional process, which is, you know, very manual, and bringing it to an online auction. Auctions were still, at the time, were a known way of transacting commercial real estate and residential real estate, typically for distressed real estate. Uh, what we did was really just bring that auction part online. The rest of our process was, uh, still very much like a broker.

Sjoerd: [00:02:39] All right. Yeah. Was it a big operation?

Michael DeGiorgio: [00:02:41] So when we started, I was, you know, maybe one of the first five people on the commercial division. My, after being there for about three years, we had raised a large round from Google Capital. We raised $50 million at a 1.2 billion valuation. The company grew to 1,000 plus people [inaudible 00:02:56] during my time there. And then, I left. So got big over time.

Sjoerd: [00:03:00] Yeah. And so, you left, and then immediately after, you started CREXi? Or did you leave really to start CREXi?

Michael DeGiorgio: [00:03:07] Left to start CREXi. I was pushed by a former mentor of mine, uh, over drinks one night, to kind of, threw a, lobbed a question at me asking what I would do if I could go kind of out on my own. And I responded by telling him, "I think there's a way to bring, really, everything about commercial real estate, leasing, transacting, data, online in an intuitive way that's not out there, and I would go start that company." And he became my first investor, and I left my career behind about a month and a half later to go start CREXi.

Sjoerd: [00:03:36] All right. So basically, you are this, well, let's say, hardcore real estate veteran. And during your time at Auction, you were just thinking, "Ah, we could do this so much better." Is that what happened?

Michael DeGiorgio: [00:03:48] Yeah. I think especially, you know, at first, I was very bought into the vision. I think over time, as I learned how the transaction works for real estate really well, I probably sold 600 commercial real estate properties during my time there.

Sjoerd: [00:04:00] [laughs] Wow.

Michael DeGiorgio: [00:04:00] As I kind of st...