A Q&A with Honest Buildings co-founder and CEO Riggs Kubiak. The startup, which is an online network of commercial real estate pros and building/construction service providers, raised $5.5 million in Series A funding in late June, led by RockPort Capital Partners and The Westly Group. Honest Buildings previously raised $2 million in Seed funding in September of 2012.
SUB: Please describe Honest Buildings and your primary innovation.
Kubiak: The HB Network is the only online network dedicated to commercial real estate professionals allowing entrepreneurial and innovative companies, who deliver unique solutions for buildings, to get matched seamlessly with decision-makers looking to maximize their building’s value. We gather and analyze a wide swath of building data, company data and the company’s project experience data to match talent to commercial real estate opportunities faster and more efficiently than ever before.
Through the HB Network, individuals and companies are also able to create profiles and portfolios of their recent work—such as construction projects, lighting retrofits, and architectural designs—and attach them to over 1.6 million building profiles on the HB Network where these projects were delivered. Users are able to add pictures, tags, and even cost information, which is all aggregated into our databases to facilitate better building-related decisions.
Our core service that we deliver as a value-add on top of this rich network of information is called HB Match, which allows us to work directly with decision makers to manage the process of locating the right solution provider for their specific project. The solution providers love it because they only pay when they win new business, and for the decision makers the service is always free. It’s simple and easy. [To see it in action, check out the company’s intro video: http://vimeo.com/69105636]
SUB: Who are your target markets and users?
Kubiak: Commercial real estate decision-makers and building solution providers. For example, Honest Buildings’ platform has served the real estate project needs of a number of the industry’s most prominent firms, including Cushman & Wakefield in New York City.
Honest Buildings has also been used by Sitt Asset Management, a New York-based real estate investment firm, that tapped in to our HB Match solution to compare qualified service providers for multiple capital improvements at 450 Broadway, a turn-of-the-century commercial building in Manhattan for which Sitt is currently executing a complete façade restoration and modernization program in preparation for first-class retail tenancy. Sitt’s feedback after working with us was simply that we help save the company a “significant amount of money with no effort on their part.”
SUB: Who do you consider to be your competition?
Kubiak: Our most significant competition is the archaic way that commercial real estate decisions have been made in the past. Without the connectivity of the Internet, a significant majority of real estate decisions are based on word-of-mouth recommendations from friends. Although that sometimes works, most of the time word-of-mouth suggestions cannot possibly get you the most innovative and relevant talent for your high-dollar property decision.
SUB: What differentiates Honest Buildings from the competition?
Kubiak: First, we make our service free to participate in the network. We also spent a significant amount of time generating data and search functionality that allow us to take a process that could take months and turn it into minutes. Lastly and most importantly, we provide value-added services for solution providers to ensure that even if they are smaller, more innovative, companies, they are on the same level playing field in the industry. Through our system you get matched based on your qualifications, not the size of your organization.
SUB: When was the company founded and what were the first steps you took in establishing it?
Kubiak: Our company was founded 18 months ago and the first steps were really trying to establish how we could really help both sides of the real estate market do business more efficiently. Our larger vision is to enable cities to operate more efficiently through transparency to strengthen the built environment, where 90 percent of our time is spent.
SUB: What was the inspiration behind the idea for Honest Buildings? Was there an ‘aha’ moment, or was the idea more gradual in developing?
Kubiak: Throughout my career, I was constantly bumping into different challenges, most of which stemmed from not having access to the right information at the right time to make smarter decisions when comparing companies and technologies. Each time I needed to complete a project, I had to consult multiple different resources to cobble together the best way to find and compare things—whether prices, buildings, tenants, or building solutions. It always seemed like someone could use the Internet to link all these together, and make the process that much more efficient.
SUB: How did you come up with the name? What is the story behind it?
Kubiak: It was really just part of our vision to bring connectivity and transparency to the building industry, which has for many years been perceived as opaque and in some ways dishonest. We believe that by connecting buildings and the ecosystem of companies operating in and around buildings, that we can catalyze the flow of capital into the best solutions, more quickly.
SUB: You recently raised $5.5 million in Series A funding. Why was this a particularly good time to raise funding?
Kubiak: We took the opportunity to partner with two of the best venture firms in the business that we had established relationships with over the last 18 months. We were excited about the partners in both firms and their ability to help us scale our business.
SUB: Do you have plans to seek additional venture funding in the near future?
Kubiak: No plans, but you never know.
SUB: What have the most significant obstacles been so far to building the company?
Kubiak: Building any company is an incredible challenge. There are obstacles that come up every day that were never considered in the ‘plan.’ Despite the challenges, we are truly excited to have built a platform that has already facilitated the origination of over $30 million in deal flow for our network, and we look forward to continuing to grow.
SUB: How does the company generate revenue or plan to generate revenue?
Kubiak: HB Match is and always will be a free service for decision makers, and there is a small charge paid by the solution provider only upon a successful transaction. We’ve found that we save solution providers a huge amount of time and money by linking them up with decision makers who are looking for their exact products or services. In eliminating all of the soft costs, our small percentage of the transaction is more than covered by the savings solution providers are afforded in marketing and time-related costs.
SUB: What are your goals for Honest Buildings over the next year or so?
Kubiak: We want to continue to grow our business in our two core markets of New York City and London, and keep driving value to both sides of the commercial real estate marketplace—decision makers and solution providers. Additionally, we want to help buildings get better the world over and I believe we have the scalable technology and the team to accomplish that.
Honest Buildings – www.honestbuildings.com