Nick Romito, VTS co-founder and CEO.
VTS
Nick Romito is redefining the term “unicorn.” Rather than the typical suit-and-tie sporting businessman, the CEO of the private commercial real estate startup VTS, now valued at more than $1 billion, is a former competitive surfer who still hits the waves in his spare time.
The New Jersey-native began his real estate career as an agent in Manhattan in 2005, and after popping around through several roles and companies, he teamed up with his childhood surfing buddy Ryan Masiello to co-found their proptech firm (then called View the Space) in 2011.
Today, VTS manages more than 10 billion square feet of assets, a space equivalent to roughly 20 New York cities, including one in every three office buildings in the United States. More than 35,000 users across 38 countries use its services to convert leads to leases and build data-led asset strategies.
In the last two years, VTS unveiled a real-time bench-marking and analytics tool, VTS MarketView, and announced the next generation of its leasing and asset management platform, VTS 3. With the help of a record-breaking $90 million Series D funding round, the company also plans to reveal an end-to-end commercial real estate leasing marketplace, dubbed Truva, this fall. And this week, it expanded its offices to Toronto, opening its first major product development center outside of New York.
Romito’s accomplishments are not going unnoticed. In June, he received the 2019 Entrepreneur Of The Year Award in New York for Real Estate, Construction and Lodging from Ernst & Young, and VTS received a write-up in The Wall Street Journal when it hit unicorn status and named mergers-and-acquisitions pro Bob Bies as its chief financial officer this year.
The firm’s position at the crest of the proptech and CRE fields grabbed my attention too, so I caught up with the surfer-in-a-suit to dig deeper into topics like his decision not to go public and what his company’s new products will bring to the market.
Heather Senison: Why did you first go into real estate?
Nick Romito: I’ve always known I wanted to be an entrepreneur. My father was one at an early stage, and working, or “building things,” was something I loved to do at a very young age. After college I was looking for opportunities that one, encouraged an entrepreneurial mindset, and two, didn’t have a salary cap – that success was entirely on you. A friend and mentor suggested that commercial brokerage could be an ideal way for me to start out. You’re essentially running your own business and what you earn is the result of how creative, smart and hard you worked. It was also highly competitive, which I loved. My best friend, and VTS co-founder, Ryan Masiello, was also working as a broker at the time and loved it, so I jumped in.
HS: How does VTS stand out against its proptech competitors?
NR: For us, it’s always been about our vision and how well we understand our market. No other start-up in the history of proptech has had this much industry experience across the founding team. When you combine that with some of the most talented engineers, product, marketing and sales folks out there, you have an unfair advantage. From there it’s all about building great product and showing your customers tangible outcomes. With over 11 billion square feet managed on the platform, VTS has become commercial real estate’s modern operating system and the one platform that delivers real ROI. Our customers reduce their deal cycle time by 41% and double their deal conversion rates. Since the start of VTS, we’ve worked in close partnership with our loyal, committed clients to develop the products the industry really needs. Our recent $90 million Series D funding round was actually led by Brookfield Ventures, which was a true validation of the success of this approach.
HS: You told the WSJ that VTS isn’t yet interested in an IPO, despite your savvy new CFO. Why not? When do you think that might happen?
NR: Going public is something you typically do if you need capital or some kind of liquidity event (we need neither). We’re at a pivotal point in our growth thanks to our recent funding, which was the largest venture financing in the history of commercial real estate software. What’s most important to us is investing more in our platform and team so that we can build the capabilities our clients need, and expand our presence domestically and internationally. We’re incredibly fortunate to have a board that believes in our vision and our ability to execute on it. There’s no pressure to go public right now considering the size of the opportunity in front of us. We’re focused on growth and changing a very large market that hasn’t changed in a long time.
HS: You’ve recently launched a few new products, including VTS 3. How is it different from VTS 1 and 2?
NR: The first and second generations of the VTS platform transformed leasing and asset management by giving landlords and brokers one place to track all of their leases, assets, and tenants, ultimately enabling them to automate their workflows and better manage their customers. It brought them from paper to a platform. With VTS 3, we’re helping landlords use that data to move from workflow to strategy and it is the platform on which we are building our marketplace, Truva. VTS 3 introduces all-new, industry specific, business intelligence capabilities. It also allows users to create custom alerts and reporting capabilities that surface critical insights to landlords so that they can make informed, strategic portfolio decisions, proactively. For example, by being able to compare the state of the current portfolio to market dynamics, leasing managers have the insights they need to hone in on the right marketing strategies. And for asset managers, up-to-date supply and demand information allows you to convert more of your current leads by re-imagining space to match existing demand. It showcases the real power of data.
HS: And you’re about to unveil Truva. Since most online real estate marketplaces that are household names right now are residential, how will Truva be similar and different to the platforms we’ve all gotten used to?
NR: If you were looking to rent an apartment, you’d be hesitant to go and see it if the listing didn’t include up-to-date photos, pricing and availability information, and you wouldn’t even know it was available in the first place if it wasn’t listed online. But that’s exactly what office, retail and industrial tenants are forced to deal with and part of what we’re solving with Truva (Truva.com. Think of Truva as a mix between Zillow and Airbnb, powered by more than 11 billion square feet managed on VTS. Tenants and their tenant reps will be able to search and actually lease office space, completely online. And landlords will be able to instantly showcase their office listings, both current and future, to reach tenants and brokers that are searching now, something they’ve never been able to do before. The largest difference between Truva and residential marketplaces is that it’s built on top of the core workflow platform used by the landlords and brokers themselves everyday, which means Truva’s listings data is the most accurate and up-to-date in the entire industry. Combining that with a modern process that focuses on the end user is something our industry has lacked for a long time. Truva will launch in New York City this fall.
HS: From your vantage point of commercial real estate, do you see flexible work spaces taking over the market? Are the days of companies renting entire floors and buildings coming to an end?
NR: They kind of already have. Flexible work space has done something transformational to CRE: put the customer above everything else. Most young companies have no idea what their future holds so signing a long term lease when you have no idea what your head count will look like in six months let alone five years doesn’t make a whole lot of sense. Combining that with the burden and cost of having to build out an office, buy furniture, and design a space is not only expensive but more importantly disruptive. We believe just about every owner will have anywhere from 10 to 20% of their portfolio be flexible over the next 10 years. Long term leases won’t disappear as more mature companies have more predictable growth and that can certainly save them money in the long run, but flex isn’t going away.
The conversation has been edited and condensed for clarity.