Five Things Real Estate Should Learn from Other Industries

Lessons from e-commerce, Biglaw, for-profit education, entertainment and more

Feb 5, 2024
∙ Paid
  • Share this post with a friend

    Since you liked this post, why not share it to help spread the word?

Some tech entrepreneurs and investors approach the real estate industry with the view that real estate is sluggish and backwards, that returns would be enhanced and user experience improved if only Luddite owners were willing to embrace modern technology and best practices.

In most cases, this simply isn’t true. Plenty of new technology isn’t well-suited to the time horizons and specific needs of the real estate industry, and real estate operators (generally) aren’t stupid people.

But that doesn’t mean real estate owners and operators shouldn’t pick up best practices and learnings from other industries. We’ve picked a handful of things that other industries do well—and we believe would adapt well to the world of real estate.

Today’s letter will cover:

  • Specific lessons and best practices from other industries that can be applied to real estate operations, from marketing and sales best practices to training and career pathing;

  • Real estate companies—incumbents or startups—that are attempting to bring these lessons over;

  • A few things other industries do that probably shouldn’t be applied to real estate and why.

And just for fun: the biggest misconception smart people outside of real estate have of the industry.

#1: Transactional Email and Retargeting from E-commerce

Go to Google and search for a new mattress. Click a few links, read some reviews, and then continue about your life without making a purchase.

You just triggered a complicated set of processes that will have you seeing mattress ads across platforms and sites—search, social, display, mobile, web, etc—for weeks if not months to come. You’ll receive emails from companies you’ve never heard of - and definitely didn’t sign up for. You’ll also see ads for products for which you never searched—and possibly never needed—but are often also purchased by other mattress-buyers.

Graphic via Turnkey Marketing

Companies don’t do this because they want to annoy you, they do this because it works. Retargeting, which serves ads to people who previously searched for or viewed a given product, are not cheap, but they’re the best dollar-for-dollar ad spend available. The real estate industry writ large—multifamily, office, hospitality, and more—would be wise to copy it.

If a prospective tenant visits an apartment operator’s website and browses a unit floor plan, that operator should follow that tenant around the internet reminding him or her to submit an application. Perhaps the gift card offers could ramp up as the days tick by. At the end of some period of time—perhaps a couple weeks—the retargeting campaign ends and the prospect’s info is sold off to data brokers and other companies offering products to individuals with high intent to move. (It doesn’t actually matter whether the tenant entered their contact info on the website or not; it’s trivial to find for any US web or mobile visitor.) NB: Thesis Driven does not actually recommend that apartment operators without a solid grasp of technology and the law go off and start doing this, but it is common in other industries.

Next-generation apartment marketing tools like Funnel are the best at this kind of thing today, but doing it well still requires a lot of configuration. And limitations of the incumbent property management systems—which we covered in depth in December—are a limiting factor.

#2: Career Pathing from BigLaw

Industries that excel at recruiting talent do one thing well: they offer clear and established career paths in which young people can grow and succeed. Big law firms do this exceptionally well, with clear paths to grow from junior associate to mid-level associate to senior associate to counsel to equity partner. This system can also be seen at work in other sectors that recruit a lot of talented young people such as banking and management consulting.

But I focus on BigLaw here because I don’t think any sector gets away with subjecting top graduates to a more horrific combination of mediocre pay, horrible working conditions, and abuse than white shoe law firms. Now I’m certainly not advocating that real estate copy those things, but we can take lessons from BigLaw’s thoughtful onboarding and gamified leveling system, which gives recent graduates clear paths to join, succeed, and level up within firms—ultimately reaching a partner track with equity or jumping off into the world of clerkships and public-sector work.

Unfortunately, there are few places in real estate where high-potential young people can look to build a long-term career. Most major real estate developers and operators don’t have clear career paths, and training is primarily ad-hoc and highly manager-dependent. While smaller, family-owned firms can offer exposure to a wider set of functions, they also have a fixed ceiling—"you can’t get promoted to family", as they say. There is no "partner track" in real estate.

This is a tremendous missed opportunity on the part of the real estate industry. There is no reason real estate should lack the same cachet among top college graduates as banking, law, management consulting, and private equity. Given the number of billionaires with real estate origins, top real estate firms should have their pick of top graduates. The fact that they don’t is an industry-wide bag fumble.

I will note that the hospitality industry is one sector that does this fairly well. The existence of dedicated and well-respected hospitality schools—such as Cornell’s School of Hotel Management—reinforces it. And there’s an established protocol for hotel school grads to level up within the industry—one that often involves wearing a name badge and working a front desk for a few years. And that’s a good thing.

#3: Inside Sales from For-Profit Education

For any business, success is often determined by how well the company can convert its leads to paying customers. And often, the biggest driver of conversion is getting the highest-intent leads on the phone—and quickly.

No industry does this better than for-profit education, where lead callback times are measured in seconds, not hours. In 2010, I co-founded tech and design trade school General Assembly. Through five years in the education industry, I got to know the best practices of the biggest operators in for-profit education. And lead-to-enrollment conversion is one thing they do tremendously well.

While it’s intuitive that conversion rates drop the longer leads sit un-contacted, it may come as a surprise how quickly those conversion rates drop: a lead sitting for a mere 30 minutes has an 8x lower conversion rate than one contacted within the first 5 minutes of expressing interest.

Relative lead conversion by time-to-call. From a 2015 study by Velocify

The best for-profit operators go to wild lengths to maximize lead conversion. One school, for example, found that conversion rates are significantly higher if leads received a phone call while they were still browsing the school’s website. So the school lengthened their contact form, requesting the student’s contact information on the first page and asking a series of engaging—but ultimately unnecessary—questions on the following pages. The goal was simply to keep the student on the site until they could be called.

Inside sales teams—the people doing the calling—are also tremendously well-trained, using optimized scripts and objection handling. Tools like Gong can assist with this optimization, learning and making recommendations by listening across thousands of sales calls. And they’re not necessarily based in the United States, with many schools building their inside sales teams in lower-cost places with high English proficiency such as the Philippines.

Inside sales is one pillar of centralized property management, a major trend among multifamily operators in recent years. And some REITs, such as Equity Residential, have successfully centralized big components of their leasing teams for years.

Unfortunately, the bulk of the real estate industry appears poised to skip over human-led inside sales entirely, moving straight to chatbots like EliseAI. While this is certainly better than letting leads sit in a leasing agent’s inbox for hours, I’m not convinced it’s a dollar-for-dollar improvement on a well-trained inside sales team in the Philippines or rural Southern US. And the lack of robust inside sales will also stunt AI’s development: the industry is missing training data from hundreds of thousands of inside sales calls that could’ve been used to improve AI sales performance.

#4 Lifecycle Marketing from Enterprise Software

Lifecycle marketing is the practice of optimizing and focusing messaging to customers at each step of the buying process. Rather than all potential customers getting the same marketing collateral, messages are tailored to each customer based on where they are in their journey. A customer that has had a call with sales, for example, may receive a discount with a short time fuse, while a customer that has merely browsed a website will receive a prompt to read a white paper. Good lifecycle marketing campaigns also continue after a customer has made a buying decision, with lost customers re-engaged when contracts are likely to come up for renewal. Lifecycle marketing is complementary with the transactional email and retargeting we covered in #1 but deserves special consideration.

Example B2C lifecycle marketing from Smart Insights

Enterprise software companies—with sophisticated buyers and high customer lifetime value (LTV)—are particularly good at lifecycle marketing, with software platforms like HubSpot and Eloqua tailored to support lifecycle campaigns. Real estate operators, especially those with high-value customers such as office, retail, and high-end multifamily, should embrace similarly sophisticated lifecycle marketing approaches.

And some real estate tech companies are looking to bring this kind of marketing to the real estate industry. Renew, for example, offers a tool to assist multifamily managers with the tenant renewal process. In doing so, it’s building a lifecycle marketing platform that can track renters through their leasing journey across many years and apartments, giving operators an opportunity to re-engage prospective tenants as leases roll.

#5: Consolidated Advocacy from Entertainment

The biggest misconception that people outside of the real estate industry have is that real estate is a politically powerful industry, that developers are pulling the strings to get elected officials in power and favorable laws passed.

The reality? The real estate industry is impotent. Its trade associations are incompetent, its reputation is in shambles, and politicians are stepping over themselves to pass laws to stick it to the real estate industry—even when experts agree that many of those laws end up creating worse outcomes for elected officials’ own constituents.

Now agriculture? That’s a powerful industry! Despite farm owners being incredibly wealthy and few in number, they successfully lobby Congress every year to hand themselves billions in subsidies and pass ridiculous, anti-consumer mandates such as corn ethanol requirements for gasoline.

Entertainment? Gobs of power, having bent copyright law to their whims for decades and protected key members from scrutiny for harassment, abuse, and worse. (Fortunately, this has begun to crack in recent years.)

The unfortunate truth is that the real estate industry has been broadly failed by its trade associations, which have proven incapable of self-policing bad behavior among their members or pushing back on hostile and misguided legislation at all levels of government. And the National Association of Realtors—the largest trade association in the United States—has been marred and distracted by a series of scandals and litigation.

It’s not like local trade associations such as New York’s REBNY are doing any better. Long considered one of the most powerful political organizations in the state, the trade group is a shell of its past self and has failed to protect the industry from a wave of legislation driven by a desire to punish real estate as much as protect tenants.

The real estate industry should consider looking at other industry for new approaches, which may require rebuilding its trade associations from the ground up. These new approaches will likely require the consolidated, coordinated lobbying and PR tactics seen in other industries—with trade associations working together for common goals—to succeed. NMHC, NAA, and NAR, for example, should look to entertainment’s MPA and RIA as inspirations.

Fool’s Gold

While real estate certainly has lessons to learn from other industries, other opportunities to reinvent the industry are false paths. Here are a few things real estate operators have tried—and failed—to borrow from other places:


Brands are the norm in many industries: fashion, commerce, entertainment, media, retail, hospitality, and more. In many cases, the majority of enterprise value accrues at the brand level: think LVMH, Disney, or Starwood.

Many real estate operators, therefore, have been enamored by the idea of creating brands in other categories of real estate beyond hospitality—say, office or multifamily. Unfortunately, those attempts have almost universally failed.

I could write an entire letter on why it’s hard to build brands in these categories. But the brief version is that the renters of office and multifamily alike tend to make a value-based decision, and they don’t make that decision particularly often. That is, someone is only going to rent a new apartment or workplace every 2-3 years on average, and when they do they’ll primarily make their decision on value: the location, amenities, and perceived quality for the price. This kind of decision making is not conducive to building brands; purchases are too rare and value-oriented for a brand to make a huge difference.

Fully Automated, Data-Driven Investing

While quant investing in other sectors—public equities, bonds, derivatives, and even startups—has gained traction, the concept has struggled to take hold in real estate. While the data and tools available to real estate investors have expanded and improved, data-driven real estate investors like Two Sigma still keep a human at the reins making final investment decisions. These firms differ from an analyst with Excel and a CoStar subscription by degree but not at a fundamental level.

While data and tools will inevitably improve, I don’t see them entirely replacing human real estate investors in the decision making process any time soon, and real estate operators should be hesitant to try. Real estate is too chunky and too sensitive to nuanced factors of politics, demand, and preferences to fully remove the human from the mix.

—Brad Hargreaves

Recommend Thesis Driven to the readers of Devon's wanderings

A deep dive into emerging real estate themes and the innovators capitalizing on them

  • Share this post with a friend

    Since you liked this post, why not share it to help spread the word?

@Brad interesting post. What do you consider the best software stack for real estate brokers? I've played around with a few of the CRM systems but haven't found anything compelling. And Hubspot gets expensive when you have a lot of contacts.

2 more comments...
© 2024 Brad Hargreaves
Substack is the home for great writing