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OJO first burst onto the real estate scene years ago with an interactive, machine learning-based chatbot.
Since then, the company has expanded its offerings and grown its reach and just last week revealed a $200 million haul via debt and selling off part of the firm.
But because OJO operates at the intersection of housing and tech, it has a unique vantage point to watch both a tumultuous real estate market and a revolution in tools, such as artificial intelligence. And in that light, Inman recently sat down with founder and CEO John Berkowitz to discuss the market, technology and how to lead in chaotic times.
The takeaway from this conversation is that, according to Berkowitz, transparency is key, crises are opportunities, and it may take time before AI upends real estate.
What follows is a version of Inman’s conversation with Berkowitz that has been edited for length and clarity.
Inman: So OJO got some new money and is selling off part of the company. Walk me through what happened and what you’re doing with the money.
Berkowitz: We announced the combination of two deals. One was raising money from Vista Credit and the other was the sale of our Canadian operations to the Royal Bank of Canada. We’ve been working with the Royal Bank of Canada for the better part of four years.
That has been really successful. The relationship has been increasing over the years and it was obvious last year that there was a real moment to kind of go all in together, and that the best structure for both companies was to have them buy the license to our technology for use in Canada, as well as the existing operations there. That has been pulled off and now Royal Bank of Canada wholly owns the OJO Canada operations.
We have a very clear vision of how we want to gain market share in the U.S. There is a pretty big white space that we have been working on for the last couple of years in between the most serious consumers — buyers and sellers who are not in dreaming mode but who are in doing mode — and finding the right real estate team. All of our investment, all of our differentiation, is in that space.
You’ll remember the last time we raised money was April 2020, and we went and bought Movoto. I think people forget that was the time that there was very little happening in real estate. It was the one month that there were no transactions in the MLS. No funds were being raised. That was the last time we did something public, because while the water was rushing out in real estate, we saw a massive opportunity to run in. And I’m feeling like we’re in the exact same space right now. I think there’s going to be more opportunity now than there was over the last two years.
So you have a track record of making these moves when everyone else is waiting. Zigging while others zag. I think there are other industry leaders who’d like to know your secret. How are you able to do this?
We talk a lot about the Chinese translation for crisis. The Chinese translation of crisis is “dangerous opportunity” which means in times of great crisis you need to be very focused on survival. You cannot be cocky. But opportunities present themselves if you are ready to seize them. This entire company has experienced that so there’s a belief around, okay, it’s our moment and employees look for those opportunities. We teach to look for those opportunities. So the employee mindset is ready to act when the time is right.
And the other part is that our investors, our board, our partners, know that is how we think and operate. And they come to the table with that mindset. The last round, investors were the only people writing checks. Very few investors in April 2020 were doing anything anywhere, never mind real estate.
So when you have a company that’s ready and a team that’s ready and partners who have that mindset, you can move fast when others aren’t.
Talk to me about being a leader during a tougher time. How are you keeping morale up when this is very much a different market than it was a year ago?
I think there has been a few things that we’ve consistently done in good times, bad times and the time between. One of those is frequent transparency and candor. Being really honest about how I don’t know what the market is going to look like in three months, and I don’t know exactly which way it’s going to swing. But saying, ‘here are the different ways that we will operate in those environments. Here are the things that I as the CEO am scared about.'”
I’ve been doing those things consistently since running this company. And I think that it builds a sense of calm in the employee base because they’re not seeking information from public headlines or other employees outside company meetings. Because they know that if they want to know something, every two weeks we do an Ask-Me-Everything. And I answer everything.
So there really is no wondering at OJO. You really know what is going on, and I think that gives you a sense of calm and acceptance where we can’t control the macroenvironment but we can control what we do every day.
It’s at times like this that great entrepreneurs, great companies, really kind of get unfair advantages. And I’ve been saying that consistently because I believe it.
You guys are pioneers in technology, so I wanted to ask you about what feels like an artificial intelligence revolution right now. I’m wondering two things. First, what do you think of this explosion in AI, and second, what applicability will all these advancements have for real estate?
I think now we’re in a hype cycle. Usually, you’d look at a technology like ChatGPT and say, ‘okay that’s game changing for all industries.’ But in reality, with how technology gradually then suddenly changes things, you’re probably on a five-year time horizon. That’s what you’d normally say around a really steep function increase in technology.
I don’t think ChatGPT or any of these kinds of new-age AI systems are going to fundamentally change anything. I think you’ll see a lot of the big companies starting to talk about their use of the technology. You’ll probably see a startup player or two doing something. But I don’t think in the next two years it changes much.
That being said, the potential of the technology and how much it has improved over the last 12 months do have the potential to impact most industries. I think our industry, definitely.
So I think in two, three, four years it’s going to be very interesting.
The biggest question is, who is going to own the computing power and how are they going to charge? Because if Google goes open source with it, awesome. Then you can really build and innovate on top of it and it becomes a commodity where it’s about who uses the tool best.
On the other hand, if Google wants to have that skill themselves and not distribute it, then the only players who are going to be able to do this are the ones who will be able to afford the computing power and the advantage will switch back to the big players.
So there’s an interesting split where it’s a question of, will this be an arms race of money to get access to this technology? Or will it be an arms race of great execution and application of this technology to kind of build new experiences?
I can’t tell you which way it’s going to fall. But we’re excited about the advancements. We’re testing different things. I think in 2023 and 2024 it’ll be hype and not real action. But these technologies are making decisions quicker and more completely than other technologies we’ve ever seen before.