A week in AI is like a year in other industries. I hope these issues become your weekly source of AI information, inspiration, and ideas.
If we haven’t met before, I’m Amanda Smith. I write about AI and the fascinating folks who are building in this brave new world.
Good morning. I was at a Media Summit in NYC this week. It was interesting to see big publishers and brands wrestle with AI and its place in their businesses. Whether at a club or a coffee shop, AI comes up.
My favorite line of the day was this: “There are rare instances in history when you know in real-time that a technology will change everything.”
History is being made now.
Every industry and trade is being disrupted, even those that were seemingly untouched by tech before. Like real estate. This week’s founder saw an opportunity in its tradition.
— Amanda Smith
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This week in AI:
OpenAI x AWS partnership
Two giants have teamed up in a $38 billion agreement, with OpenAI accessing AWS compute to run and scale AI.
Getty Images loses AI lawsuit
The stock image and video leader lost against Stability AI, who used Getty’s images to train their model.
Anthropic’s $70 billion projection
They’re projecting $70 billion in revenue and $17 billion in cash flow by 2028.
Company background: Radius
Founded: 2015
Team size: 40
Funding to date: $30 million
MRR: Not disclosed, but they close $3 billion a year.
Growth metric: “When we power these brokerages, they move their licenses to us, so we are a tech company that has a brokerage license.”
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He built “Shopify for real estate agents”
Biju Ashokan has spent his career trying to bring tech to real estate, and real estate to the 21st century. His first real estate start-up was a tech-savvy real estate brokerage first. His second (and current start-up) makes software to optimize brokerages. Running a real estate brokerage, Ashokan realized how repetitive the workflows were and how traditional the industry was. They have a CRM and website, and call it “tech.”
Even the biggest brokerages like Compass and Anywhere are barely profitable. Anywhere has 300,000 agents. “There’s something inherently wrong with the way brokerages are run, where even at scale, it’s not profitable,” Ashokan said.
So, he set out to make the P&L of every brokerage in America as efficient as possible, by integrating AI into every workflow with his product, Radius. Key real estate leaders and VCs backed him from the start – including Pete Flint, the former CEO of Trulia, Spencer Raskoff, the co-founder of Zillow, and Gokul Rajaram, the prolific tech investor. “I can pick up the phone anytime and talk to these people if I have questions or want to brainstorm,” Ashokan said.
Problem-led product design
Ashokan didn’t rush into the building. He spent the first few years talking to people about their problems. Brokerages struggled with profit margins. Agents wanted to be independent. Buyers weren’t happy with the service they received. The team baked these problem statements into the platform.
For the agents, we said, “we’ll create an entity for you and keep you as an independent brand, while Radius powers it in the background – kind of like Shopify.”
For the brokerages, instead of the agents having to go to their managing broker to get answers to technical, compliance and transaction-related questions, they can ask Mel, the Radius AI assistant. Mel’s been trained on everything related to the properties, locations, compliance etc. Then, the managing broker oversees Mel.
From the customer standpoint, they can access a white-labeled app where they can view properties that Mel recommends, do their own search, and chat with the agent if they have questions. For example, what schools are nearby a house they like. “Mel responds on behalf of the agent and the agent can see it. It’s like a three-way chat.”
“We created something called a CRA: Customer Relationship Automation, not Management. Mel listens in on calls, puts all the actions into the CRA, schedules appointments, collects research, and reaches out to the client via email, chat, text, and even voice.” At the end of every day, Mel summarizes every client and tells the agents which ones to focus on.
The goal? “An agent who typically sells six homes per year will probably end up selling 20-25 properties.”
Beyond lead gen and communications, AI is also enabled in transaction management, compliance support, and reporting.
How they’ve grown to $3B
With every real estate agent and professional getting blasted with dozens of messages per day, standing out is a challenge. “In this industry, it only works when it’s a good inbound machine.”
Ashokan does this in three ways:
PR
Events (hosting dinners, education sessions and sponsoring partner events)
Drumbeat marketing (website, email and social)
“Referrals and word of mouth are still huge in real estate, because agents work with other agents all the time. 80% of our top of funnel comes from referrals and word of mouth, but they go to our website and socials to validate us,” he explained.
Radius’ biggest social channel is Instagram, but they’re bullish on videos.
Total revenue through the Radius brokerage is about $3 billion, but they want to double it year-on-year. “So that means we sell properties worth $3 billion every year now. As long as more transactions go through our system, we’re growing.”
Success equals transaction size and how much of the transaction went through their system, from lead gen to close.
“We take a commission out of every transaction. When we power these brokerages, they move their licenses to us. We are a brokerage by definition, but we are a tech company that has a brokerage license. That’s our revenue model.”
There’s also a subscription for using the software, which is the second revenue stream. This year, they launched a mortgage company, where they take another commission escrow.
As of today, Radius powers 80 brokerages which have almost 700 agents.
Takeaways
Always talk to your customers about their pain points… but never listen to them on what to build. Go deeper on what problem they’re actually asking you to solve, then see if you can do it in a better way.
People driving AI need to be experts in their field. Otherwise, you’ll get average outputs. Talent and taste matter.
Every industry is about to get optimized with AI. Leverage AI to make your people more productive. In this world, personal opinions and insights are even more valuable.
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