Making Commercial Real Estate Investing Accessible | Tore Steen from Crowdstreet

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Alexander Ferguson 0:00
Thanks to advancements in technology investing has become easier and more accessible than ever. In this episode, we sit down with Tore Steen at Crowdstreet to discuss their commercial real estate investment portal. Along with making this type of investment more accessible, their portal is integrated with DocuSign and verify investor and is meant to streamline the entire workflow for investors towards the CEO and co founder of Crowdstreet, previously leading marketing and sales efforts at Janrain web trends and Earthlink. Alright, thank you so much for for joining me too. I’m excited to learn more about crowd Street, how it started the direction that you guys are heading in the future of it, as well as how you are constantly innovating and staying current. So first off, tell me what year did Questrade starts? And where are you guys based?

Tore Steen 0:47
Yeah, so we started CrossFit in 2013. We’re headquartered in Portland, Oregon, and and then we launched the actually public launch was in April of 2014.

Alexander Ferguson 0:56
Gotcha. How many employees? How big is your team right now?

Tore Steen 0:59
Yes, today, we’re 90 employees. So come a long way from just Darrin, my co founder myself, so there’s two of us in 2013 to now 90 At the end of 19.

Alexander Ferguson 1:10
Awesome. Now, how many customers? Are you serving right now as well?

Tore Steen 1:13
Yeah. So when you think of customers, right, we’re a two sided marketplace, right? Because we came into this to to provide open access to investors to invest in commercial real estate across our country. So on one side, you know, we consider customers, the investors, the consumers. And we’ve got over 40,000 registered accredited investors on our marketplace today. And then on the other side, would be kind of the supply side, right, the product, the commercial real estate developers or operators, we call them sponsors. And we’ve got over 300 sponsors that we work with across the country, we’ve done deals in 42 different states. So we pretty much covered most of the country, there’s a few small states that might not have as big of a development options. But that’s that’s kind of the customer base.

Alexander Ferguson 1:59
Gotcha. So 40,000, then connected in 200. Tell me more about then that the market market segments of the problem that you’re solving for this connection that you’re making, yeah, so

Tore Steen 2:08
when Darren and I got started Alex in 2013, it was really to provide access and transparency and efficiency for investors to invest in commercial real estate. It’s been, you know, one of our largest industries in the US, it’s also been one of the most private and kind of locked industries in terms of investors being able to access a building and see a building going up, or a building being redone. But being able to be investors in that it’s traditionally been beholden to large institutional investors, or ultra high net worth, where they’ve got to put millions of dollars into that deal, right. And so what we wanted to do was provide more access, more transparency and more efficiency for a consumer.

Alexander Ferguson 2:55
What’s the lowest then that investor could already get involved with? Yeah, so

Tore Steen 3:01
we’ve dropped the minimums down to as low as $25,000. And again, this is probably a TEDx decrease to what traditionally would be invested through, let’s call it the country club model, where, you know, developer operator had high net worth investors, and they would say, look, minimum investment is 250,000. So we’ve been, you know, able to bring that down, down by TEDx and to the developers to the sponsors, if you will, we provided a technology platform to enable that to happen. Because you don’t do that in the offline world, right? paper based it would not be that would not be efficient,

Alexander Ferguson 3:38
that would not scale. So tell me more about then the technology behind it the platform itself?

Tore Steen 3:42
Yeah. So when we kind of broke it down, Alex, we looked at and said, you know, what is the entire process that a developer goes through to raise the capital, and then the Manage ambassador, so we think about it, the presentation of a deal? A lot of times they’ve, you know, in the older days, they print out packages, right? deliver a package, now they send PDFs. And so how do we do that in kind of an online paradigm. So we have kind of a publishing platform so they can, everything that they used to email they now put up on the website. And so for an investor, everything’s at my fingertips, right, I don’t have to like check emails, I don’t have to get something in the mail. I’ve got this beautiful website with everything about the deal. It’s got all the pro formas. It’s got the pictures, it’s got kind of everything that the package would have. The second piece of kind of that process that we enabled with technology was let’s call it the transaction. It’s kind of like an E commerce. It’s like your cart checkout process, right? And so what does an investor go through from submitting their offer to signing documents, wiring their funds, and then ultimately being invested into that deal? We’ve done that in a kind of a streamlined online workflow. Then the then the fun begins is once you’re invested, you know, how do I get updates about my investment? How do I get distributions and so we’ve managed to use technology for the sponsors to really enable an online way to manage investors, kind of like a CRM system, you know, to manage your investors. But here, it’s an actual live investor portal where they can upload documents, investors get triggered emails, they know when their quarterly updates are coming up. So an entire kind of investor lifecycle management,

Alexander Ferguson 5:22
you’ve been able to incorporate into your platform. Tell me more about then partnerships or API connections, it sounds like there’s many pieces you’ve already mentioned, whether it’s the transfer, the money transfers, tell me more about kind of partnerships or API connections that you’ve created. Yeah. So

Tore Steen 5:38
we’ve had some of the ones that we brand names, we know DocuSign, API integration with DocuSign. So that as an industry goes through, they don’t have to pop back out. Gosh, you know, sign actually a wet signature. So DocuSign is integrated. Another one’s called verify investor. So as part of this process, the SEC requirement is that an investor go through an accredited verification process. So there’s a third party called verify investor, we’ve got an API integration to them to enable that. And then we’ve obviously got an API integration to kind of a clearinghouse if you will, North capital, private securities that does kind of Escrow management, ACH management, and all that good stuff that you know, plenty of other third parties that do that better than us reinventing it. So having those API integrations, ultimately to streamline the entire workflow for an investor. So they don’t have to pop out and do other things, they can stay inside that consistent process

Alexander Ferguson 6:33
for entrepreneurs that realized that the power of making API connections to their own platform, any learnings that you had over the years have you had that incorporate those API’s that you can share?

Tore Steen 6:45
Well, yeah, one of the learnings I’ve had, and this is, you know, I’ve been in SAS internet space, most of my career. So I’ve done a lot of integrations with partners, a lot of challenges. In that, you know, road, I think one of the challenges we have is, you know, we’re built on the market, modern architecture. So we have kind of API’s built out of the box that are easy to integrate with, it’s harder when you work with some players out there in the industry, who maybe are not on a margin or modern architecture, they don’t have publicly available API’s. So it’s really, you know, going through a process with those types of partners to say, let’s figure out what’s possible. Maybe it’s, you know, not an API integration, but a file upload of a CSV, I hate to go all the way to that rudimentary way. But Excel has been around and if you can create a CSV importer export function, so we’ve actually had to create kind of that CSV importing and exporting functionality for those that might not have API’s.

Alexander Ferguson 7:44
Gotcha. So realizing when where you can try to work a relationship or partnership or when you just have to, okay, we this as far as the bar will go, just kind of brute force it right. Yeah. Gotcha. Now, how are you continuing to move forward and innovate? Like, tell me any plans for five years from now? Where do you see the company?

Tore Steen 8:09
Yeah. And I think it’s a great question, because we’ve actually been doing some major innovation in the last year, Alex. So when we first started, the marketplace, you can think of as self serve, so an investor would come, we would be screening and vetting and, and the quality control over the deals that would go on to our marketplace. But ultimately, investor had to pick and choose which deals they wanted to go into. This year, we launched our own series of funds. So a crowd Street investment vehicle, where we create a pooled fund of diversified assets. So the investor doesn’t have to pick and choose. And for 25k, they can put that into the fund, which will then diversify across 30, or 40 deals in a nine month period, they’ll get a little bit of multifamily, a little bit of senior housing, a little bit of Office industrial, different risk profiles ground up, but some more income producing kind of core assets. So these are new products that, again, when we think about how do we delight investors, right? Because ultimately, it’s about how are we delighting the consumers that come to our marketplace. So as we look forward, I look at some great, we just launched our opportunity zone fund, right opportunity zones. There’s a big deal in the market today, because of the capital gains, tax shelter capabilities that investors can see. So we’ve been kind of continually innovating in some of these products. Our marketplace is kind of obviously the place that this all kinds of breathes and lives. And so we’re gonna, you’re gonna see more interesting kind of products that crowd Street’s going to provide, because there’s 12 million accredited investors in the US and they want to share it with you. We got 40,000 We’re just getting started.

Alexander Ferguson 9:44
Just getting started. I can see the vision and interesting the additional products you can bring on that can attract and connect and resonate with different types of customers and clients. Can you share any of your thoughts of on there’s hurdles obviously, in order to reach to get to the maybe reach all 12 million, what do you see are gonna be the hurdles you’re going to need to overcome in order to realize the vision.

Tore Steen 10:06
One of the hurdles, and again today, it’s been very direct to consumer, right? We’ve been Brenton, our marketing team has done a great job of kind of getting the message out there getting the brand out there, attracting, you know, credit investors, but we know that a lot of investors like to go through their advisors, right? When they’re making investment advice. They say, You know what, I’d like somebody, I have a financial advisor, that’s my fiduciary, that kind of helps me with my investments. So one of our challenges, one of our opportunities really, is how do we make our products and services also accessible to a financial advisor, right, because that might be the person that then is really making the investment on behalf of their client. And as we all know, financial advisors have had access to stocks and bonds and mutually all the usual kind of more publicly traded more liquid investments. And these more private illiquid investments that have great returns have been less accessible to those advisors, or if they have been accessible, they’ve been kind of a publicly traded REIT, right, which is really a stock that you’re owning as part of a bigger company.

Alexander Ferguson 11:14
Interesting. So taking the potential hurdle of these financial advisors being a gatekeeper and almost turning them into a customer themselves.

Tore Steen 11:21
Exactly. We have to look at them as that the potential customer because they are the trusted intermediary between crowd Street’s marketplace and the ultimate investor.

Alexander Ferguson 11:32
Well, I excited to then see as you continue to explore, understanding different mindsets and being able to serve that for you personally, how are you innovating? Where are you looking to grow? Personally? Do you go any websites? or thoughts or ideas that you how do you generate new concepts and ideas?

Tore Steen 11:51
Yeah, I mean, I think I obviously I’ve been in the internet space since 9899. So I’m constantly looking at new technologies and new new features. And again, it’s it’s a little mundane, but for example, you know, productivity optimization, right? In a company that’s 90 people, we’re not 900 or not 9000. Right? So always thinking about how can you be more efficient? How can you make your team more efficient? And what tools can do that as we’re trying to scale the business? So, you know, an example would be using Trello. Now, right? We’ve got multiple teams around crowd street that have now become like addicts to Trello, right? It’s kind of like I hear about a Trello. Board another. And it’s great, right? Because it’s making the teams more efficient. And it’s a really great way for them to collaborate. So having these new kind of collaboration, as we knew, you know, 10 years ago, there weren’t a lot of collaboration tools, then there was a whole bunch. And now people kind of, you know, we use Slack a lot, for example, right. So now that’s kind of picking those tools that can really optimize teams.

Alexander Ferguson 12:53
Awesome. Do you have any favorite books or audio books or podcasts that you’re listening to right now that you recommend for another entrepreneur? CEO?

Tore Steen 13:02
Yeah, one that I actually am rereading, again, is John dores measuring what matters. And it’s just a really just a great reminder. It’s it talks about OKRs, you know, objectives and key results. And again, methodologies have been around forever in terms of how you kind of set strategic initiatives, how do you measure those? How do you, you know, kind of keep your teams aligned. And I think measure what matters by John doors is kind of one of my favorites. It’s, it’s a quick, easy read, it just kind of reorient it to is, you know, how do you lead teams? How do you set initiatives? How do you set the kind of objectives for them? So it’s a it’s a good book? It’s yeah, it’s a favorite.

Alexander Ferguson 13:43
I’ll have to check that out. Thank you so much for joining us, where can people go to learn more, what’s kind of the first next step that you’d recommend they take?

Tore Steen 13:50
Yeah, we’ve tried to make it as easy as possible. They just go to Crowdstreet.com and, and they’ll see that, you know, lots of content because we recognize it. Again, this is an asset type that people traditionally haven’t had access to. So we have a lot of educational content about how to invest in commercial real estate, what to look for, we’ve got our blended portfolio that kind of is very easy to kind of get started. And so you know, lots of great content, lots of articles. We do a lot of webinars on there as well, to really help investors, you know, determine what’s the right path for them. And then they can register there and start looking at some of the deals because we got at least three deals that go on every week, new deals that go up on the marketplace.

Alexander Ferguson 14:31
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