Kylie Davis:

Welcome to the PropTech podcast. It's Kylie Davis here, and I'm delighted to be your host as we explore the brave new world where technology and real estate collide. It's so great to have you here and to share stories of innovation and opportunity across real estate property and building services. And the aim of each episode is to introduce listeners to a PropTech innovator who is pushing the boundaries of what's possible across how we design, build, buy, sell, rent and invest in property and all of the associated behaviour and activities around that.

Kylie Davis:

Now, none of this would be possible without our sponsors so a big shout out to the Direct Connect team, making moving easy, Dynamic Methods, the innovators behind the Forms Live, and Realworks Forms and the PropTech Association of Australia. Thank you for your support of the podcast.

Kylie Davis:

My guest in this episode is Steve Carulli, founder and non-executive director of Cirrus8, new locally grown property management software for commercial real estate that is cloud-based, AI rich and highly flexible. Now, Steven has a 30-year plus history in commercial property ownership, management and real estate, including four years as managing director and licensee at Jones Lang LaSalle for Western Australia and 21 years as a director of RealTrust Property Accounting Services, Australia's largest outsourced property trust accounting service provider.

Kylie Davis:

Now, Cirrus8 was founded seven years ago, born out of the frustration with the then current suite of property management tools for commercial property, and it is now rapidly growing its market share among some of commercial real estate's biggest brands. Steven Carulli from Cirrus8, welcome to the PropTech podcast.

Steve Carulli:

Thank you very much. Very happy to be here.

Kylie Davis:

Yeah. So look, I would love to hear the elevator pitch for Cirrus8. It's always the hardest question that I ask and we'll get it out the way early on.

Steve Carulli:

Sure. Look, I guess Cirrus8, it's a cloud-based software platform built for the commercial property management industry. It's intuitive, it's user friendly, and it has lots in automation to make people's daily lives easier.

Kylie Davis:

Fantastic. So what's the problem that it's solving? Why does property management in commercial need this kind of software?

Steve Carulli:

Look, I think for a long time, a lot of the processes in commercial property management can be quite manual, quite repetitive, quite boring, to be honest. And until very recently, the platforms available really didn't streamline those workflows and I guess leverage technology where they could. And to be honest, that's one of the reasons we built Cirrus8, because there just wasn't anything in the marketplace coming close. So fundamentally, I think what we try to do is really just make our users and our customers' lives more productive and more enjoyable.

Kylie Davis:

So how long have you guys been going for?

Steve Carulli:

So we've been live in the cloud for six years, just by a couple of days. The first couple of years with any startup is bumping around, trying to find, one, seeing whether your product is going to find a market, but, two, just getting the marketing and the pricing models right. But really, we've just been really super excited about how well adapted or how well taken up the product has been.

Kylie Davis:

Yeah. So how big an issue ... Well, help me get an understanding for the size of the market that Cirrus8 is working in. How big is commercial property management?

Steve Carulli:

Yeah. Look, the numbers we use as a market size, in revenue terms, the market is about $1.4 billion in management fee revenue that's collected so it's substantial. Even though the numbers of commercial agents seem to be fewer, what they're doing is generally larger scale asset and larger volumes of money. And as a consequence, because it's not so visible, it often gets forgotten a bit and the focus is always on the residential market or the strata market and commercial, whilst big in volume or in amounts of money in user numbers or agency numbers, it gets lost.

Kylie Davis:

Yeah. So, well, look, property management often gets lost in real estate businesses because all of the emphasis is on the sales heroes. Right? So software wise, it has always been a neglected spot, but who are the incumbents in this space and what does Cirrus8 do that they don't?

Steve Carulli:

Yeah, look. The vast majority of our competitors, all of our competitors are overseas-based companies, most of them in the US, a couple in Europe. They tend to have been around forever. So groups like MRI, Yardi, CMS, Manhattan recently, some of the legacy systems in Australia like RP Office, and there's been a few others that I won't mention. But the truth of it is that's our market that we compete in, and the truth of it is most of them, without being unkind, haven't really innovated in the space. They've had a pretty easy gig, and we have really bought the benefits of the cloud of SaaS-based software to an industry that we thought was screaming out for it.

Kylie Davis:

Yeah. Well, look, some of those businesses are long time suppliers in the industry and so a lot of their original tech was built in legacy platforms anyway. So one of the benefits of your age, I guess, is that you've been around since the cloud has been more of a thing.

Steve Carulli:

That's exactly right.

Kylie Davis:

And migrating, I completely forgot about RP Office and I used to work for CoreLogic, so there you go.

Steve Carulli:

There you go.

Kylie Davis:

Oh, dear. So Steve, we've got a little bit of a cheeky question for you. One of the things that stops companies wanting to move to a new data provider is the pain that goes along with moving from an incumbent. How painful is it to move from an incumbent to Cirrus8?

Steve Carulli:

Look, you're a hundred percent right. And because we're commercial agents ourselves, we've lived through data migrations and system implementations, and it is disruptive. It's never fun. People resign, and it's a time in your business [crosstalk 00:06:43]. It's never fun. We don't pretend when we're counselling people before the go lives that it is easy. It's oftentimes a bit messy, but what we've done that we think makes it a lot more easy is we've got a really big implementation team, a really big training and support team. We're one of the few, if not the only group that offers in-house training in every state, so we've got offices in Brisbane, Sydney and Melbourne. And what we find is that, notwithstanding COVID has stopped a bit of that more recently, prior to that, people really seemed to respond better, having someone sitting across a desk explaining them in that early phase when they're learning the system and getting that initial training.

Steve Carulli:

Yeah. So look, it's very, very unlikely you'll ever take the complete pain out of a data migration, but having said that, I always try and say to the groups we talk to, "You look at it as a really positive proposition. You get to clean up the data, really bring the integrity up and start with more powerful, clean datasets that you can then use to run your business better."

Kylie Davis:

Yeah. Absolutely. Look. At the end of the day, these big projects like a migration require time and respect. You can't just expect to get them done between knockoff time at 5:00 and before you walk in on a Monday morning sometimes and have it all work seamlessly out of the box. You need a little bit of a run up to it. So tell us a little bit about your background. How did you come in to be in this space?

Steve Carulli:

Well, look, I'm a co-founder with my business partner, Raymond Bechard. We have both commercial agency backgrounds. So Raymond is a long-term property accountant, and I was I guess the managing director of the business we ran. So we had a boutique agency. We grew to about 70 people in West Australia, and we ended up selling it to Jones Lang LaSalle, and I ran Jones Lang's business for four years before getting out of the agency business. But overwhelmingly, what we always felt was there had to be a better way and a more workflow efficient way of doing property management.

Steve Carulli:

And to your point earlier, property management really is where the value of the agent, particularly if we're talking about real estate agents as opposed to owner managers and syndicators and fund managers, the value of their business is really in their rent role, in their property management recurrent income. And to a great degree, it probably isn't or hasn't been to date really appreciated for what it is. And I think increasingly, people are seeing it as a really big piece of their business, certainly recession proofs them and gives their business that ability to write out global pandemics and what we've been through.

Steve Carulli:

So yeah, that was, I think from our point of view, from our knowledge of the industry at a high level, we just understood, there was a really good opportunity to come up with a product that, one, was very aligned with Australian requirements and then was potentially portable to the rest of the world also.

Kylie Davis:

Fantastic. So what does Cirrus8 let you do that the legacy systems don't, apart from that automation? What specific jobs does it make easier?

Steve Carulli:

Look, what we've tried to do is obviously it's in the cloud, so all you need is a device and an internet connection and you can access it from anywhere in the world. We've introduced things like owner portals and tenant portals and contractor portals, which with other systems are not new, but they're relatively new to the commercial real estate market. And then we've automated lots of processes that are notoriously laborious and repetitive, things like rent reviews and arrears collection and charging interest on arrears. We've really streamed the whole work order facilities management piece, so we've got these really well thought out links between originating a quote and having the quote come back in and then approving the work order and then the invoice being uploaded and with lot ...

Kylie Davis:

So many emails.

Steve Carulli:

Yeah. Well-

Kylie Davis:

So many typically in the old days, right?

Steve Carulli:

That's right. In the old days, it was an email with a PDF attached and then they come back and copy all and everything in one central, that old saying, that single source of truth. Everything lives in one really efficient repository, which is what, certainly the businesses I ran previously, we've had multiple systems, low data integrity because not everything was being updated regularly and with just lots of wheel spin trying to get good quality analytics out of the systems you were using.

Kylie Davis:

So does Cirrus8 have an analytics side as well?

Steve Carulli:

Yeah. We've just launched our executive management dashboard, which gives the managing director or the business principle really good trend analysis in terms of how their business is growing and really good right down to understanding how each individual portfolio manager is performing from a profitability point of view, which a lot of groups are doing in an Excel spreadsheet on the side, but we've streamlined it and built it in so it auto-populates all their information.

Kylie Davis:

Awesome. Okay. So tell us, how what's your business model?

Steve Carulli:

Look, we're a typical SaaS, software as a service, business model. We're subscription-based. We're a bit different to what else is in the market. We charge per user as opposed to per lease or per property. And the reason we do that, we're really proud of the fact that we find when groups migrate across to Cirrus8, they can actually manage more leases per property manager than they can on other systems, which means by charging on a user basis, it's actually cheaper for them in terms of system access.

Kylie Davis:

Okay. Awesome. So you've got some pretty impressive clients I saw on your website. Tell us about some of them and what their experiences have been.

Steve Carulli:

Yeah. Look, we love all our clients. I won't single anybody out. It's like picking a favourite child, but the one-

Kylie Davis:

There are some good names in there.

Steve Carulli:

Look, there are. We're really proud of how it's been embraced right across the market. The thing that's probably been I guess most exciting is that when we tend to get one group in a national affiliation on board, we tend to end up in pretty quick time with all of the groups around the country, and then that gives the opportunity for those groups to write some bespoke data analytics around their marketing group or their national business. Yeah. So look, like anything, we found harnessing the power of third-party referral is really powerful. If other people are telling someone that you're a good proposition, it's much easier than us banging the drums saying, "Come and have a look at our product."

Kylie Davis:

Yeah. And look, one of the jungle drums that I've heard around the whole property management and the commercial space too is that the issue of data ownership is an issue.

Steve Carulli:

Sure.

Kylie Davis:

Can you tell me more about that?

Steve Carulli:

Well, look. Obviously with a SaaS-based platform, we're hosting the data and the data is hosted in top tier data centres offering the latest and greatest in data security. But certainly when you're a property manager, you're often holding lots of sensitive information on behalf of the landlord. And one of the pain points used to be that meant that information being lost or misfiled, whatever. And so what we've been able to do by centralising and uploading it all to the cloud, giving the owner access so things like bank guarantees and lease documentation, all manner of really important documents are all sitting in one central repository. Everyone can see them. The system has a really sophisticated diary system so things like insurance, renewal expiries and all of that stuff gets hard-wired in when it's first uploaded. And then the system will send emails saying, "Hey, you need to address this particular item because that critical date is coming to range." So yeah.

Kylie Davis:

And so who owns the data, you or the client?

Steve Carulli:

It's our client's data. It's not our data. We make that very, very clear. What we've been doing more recently, we've got some aggregated data type approvals within our standard terms that allow us look at industry trends, and all of the principals I speak to are really excited and happy with that because they're hungry for that information as well. So when we're able to look at receipting metrics or something that particularly during COVID-19 has been quite important, we're able to, at aggregate level, pull information out and feed it through to our user group.

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Kylie Davis:

Well, that's a great lead into my next question, which was we've heard about how COVID-19 has been hard for the commercial property market especially. How has it gone for Cirrus8? Have you founded a time when people are doubling down on their tech and using it to upgrade or how have you found that?

Steve Carulli:

Yeah, look. COVID-19 has probably accelerated a lot of our customers move to the cloud. In different jurisdictions, lots of people working from home for long periods of time may not have had really well structured VPN networks or whatever. And as a consequence, those that were on a cloud-based platform certainly found that transition to working from home much easier. So first and foremost, it's probably accelerated people coming on board, which has brought with it some unique challenges because we've had to [crosstalk 00:18:20]. Yeah. A lot more people than we probably expected to in the timeframe.

Steve Carulli:

It was interesting. A good example, one of the challenges was when, around the country, different states came up with different tenant propositions around rent-free periods and deferrals and that sort of stuff. So we had 6,000 users around the country all saying, "How do I do a rent deferral? How do I do a rent-free period? How do I do a rent waiver?" And the beauty of the cloud is we were able to, our training and support team got together really quickly, put a series of videos together and was able to publish those videos on our knowledge base, and people, we just directed them to the knowledge base. They watched the video and they completed it really quickly and really efficiently.

Kylie Davis:

Awesome. And so I'm really curious. So as someone who's run a big commercial property group and now in the PropTech space, what's the biggest challenge been for you as an entrepreneur and as a co-founder?

Steve Carulli:

Yeah, look. For us, it's always keeping up with the rate of change. There's always something new and exciting and you want to make sure that you're I guess grabbing the bits that will really add value and don't distract you or derail you from the core business, the core game. So sorting through that has its challenges. Look, I just see the commercial agency business or industry is one that has been really crying out for a long time for the technology that I think has been available in other businesses for a fair while longer. And so the promise we make to our clients is that, "Look, you go and run your property management business or your commercial agency. We'll bring the technology. So you don't have to worry about what's new and great."

Steve Carulli:

We've got a development environment. We continue to develop all the time. And when things are fit for purpose and tested, we just copy them to live and you get them for the same subscription you were paying. So rather than having to buy version 2.0, version 3.0 and lose all the bits that you bolted on and it'd be a really expensive repetitive process, it's just a lot easier I think for people to sit back, take some comfort that that piece of their business is being looked after. What I say, it's very much led by our customers. So the stuff that we build, the new enhancements and the new features are really what our clients tell us they want.

Kylie Davis:

Okay. Awesome. And so if I am a commercial property manager using Cirrus8, how is the experience of my tenants or my property owners affected or different to past systems?

Steve Carulli:

Yeah. Well, look. First and foremost, from an owner's point of view, if the agent enables the owner portal then the owner gets visibility, read only, of all of their portfolios. So they might have four or five properties with that particular agent. They can see them all. It links in with Google Maps so they can see a little green icon and they can drill down on a property page. They get to see balances in real time. All of their document library is published. And depending upon the way that the agents set it up, all of the monthly reporting can be published to the portal. They can give that login access to their accountants and their accountants can do their best compliance. So it really is a far more efficient and seamless way of sharing the data.

Steve Carulli:

And we've actually also got uploads to other general accounting packages like Xero and MYOB and the Vision and some of these others where people can then do a data feed, a digital data feed straight into their general accounting system.

Kylie Davis:

Oh, I'm a big fan of Xero, and I love how, even just at my small consulting level, how everything feeds into that. So I can also imagine in the old days, people emailing their accountant their bank accounts.

Steve Carulli:

Absolutely. Yeah.

Kylie Davis:

Sure. What could go wrong? Yeah. So Steve, get your crystal ball out. And what do you see are the trends that are coming down the pipe for commercial property management over the next five years? It's been such a crazy couple of years, but what do you think is going to be driving what comes next?

Steve Carulli:

Yeah, look. I think first and foremost, technology is a big part of it because people are now starting to discover there is more efficient, cost effective ways of doing things. So look, the truth of it is most landlords don't want to collect their own rent. They don't want to manage their own property, particularly commercial landlords that might be wealthy, high net worth families or they're institutional owners. They generally want someone to do that job. So I don't think that the job of property management is going away anytime soon.

Steve Carulli:

I think the necessity to be price competitive in what is a very competitive market means that people need to be leveraging the best in systems and giving their staff, their people, the best tools available. So I think that's really what ... because five years in a lot of ways is not that far out. So I think that's where we'll get to. We'll start to leverage more in optical character recognition stuff and machines and robots will start to do more of that stuff.

Steve Carulli:

I think in more recent, years there's been a bit of a trend for some of the more institutional owners to pull property management in-house. So groups like Mirvac and Charter Hall and Vicinity and Westfield shopping, all of those over the last decade or so have very much moved to an in-house model. That tends to be cyclical. So whether or not they decide that it can be better done by fleet footed agents in the marketplace, overall, I think property management will look very different in five years to the extent that the way it's performed will be more based on the collection of SaaS products you've bolted together to give you a really not only cost effective solution, but a solution that catches mistakes. It gives the landlord high accuracy. It enables property managers to manage more leases, more properties, but do it in a high-quality quality-controlled fashion, if that makes sense.

Kylie Davis:

In the residential space, in the residential property management space, there's a conversation emerging that goes along the lines of as we free up property managers from the busy work of having to do all the things that are involved around property management over email then, and as automation and AI starts to support them better, the time that's being freed up can also be better used to turn them more into consultants or advisors to landlords on what their next investment property should be or to help them grow their wealth in that space. Do you think that might be a thing in commercial?

Steve Carulli:

Look, very much so. If you talk to any commercial property management company anywhere in the country at the moment, the client facing time is the most important piece. Building those relationships, maintaining those relationships and really giving that landlord that higher level attention is really what everyone aspires to. The truth of it is most people get bogged down in clumsy ways of doing things, and the process dominates the job more than the important stuff. So very much, I would agree with that. And I think property management is not an easy gig. I think anyone who's done it for any length of time, people don't generally ring you to say, "Gee, you're doing a good job." They ring you when the rent is not collected and when there's a problem.

Kylie Davis:

Yeah.

Steve Carulli:

So to be able to give property managers more that free them up, if you like, to do that high-level more enjoyable piece is a big piece of what we aspire to doing.

Speaker 3:

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Kylie Davis:

Look, I imagine the data that you're seeing. And again, completely anonymized and not talking about this in an inappropriate way. But I imagine the data that you're seeing will start to identify trends or what people's portfolios look like and help more quickly get a better understanding of exactly performance around portfolios and what they're doing. And that information, if then tied to something like, I don't know if the tech exists yet, but something like an Archistar or a PointData who are able to assess different properties and see where the potential has been fulfilled and look at development spaces and things like that. The combination of those two working together would be extraordinarily powerful. Right?

Steve Carulli:

Yeah. And look, we've already seen it, as I said, during COVID with the receipting metrics, be it a residential, be it a retail property, an industrial property, a commercial office tower. We're able within the system to differentiate which category those properties sit in. So we're able to really drill down the next level and say, well, industrial is doing okay. Their receipting metrics are up, but retail is through the floor. And so we're able to slice and dice and get a really good insight into what is happening empirically as opposed to anecdotally. And then at the same time, we've just recently started a series of sentiment surveys with our user base, given how large it's got, we can really get a national perspective and then an individual state perspective with respect to how people are seeing what's happening in the market and how things are affecting their business, which we think again will be really powerful for everybody really.

Kylie Davis:

Yeah. And look, I know one of the great mysteries coming from the residential space, one of the great mysteries to me in the commercial space was always that there's no consistent metrics around commercial, retail and especially industrial property. How do you actually compare apples with apples? So I think this stuff is really exciting because the more that you collect the data, the more you can actually start to get to that common metric.

Steve Carulli:

Yeah.

Kylie Davis:

So yeah. Can you work on that too? That would be great.

Steve Carulli:

Our head of development, every time we have a brainstorming session, I'm sure he comes out with a headache because there's so many opportunities and there's so many good ideas that flow from just general discussion. We're going to get to them all, but like everything, we need to prioritise and really do the ones that move the needle most for our client base first.

Kylie Davis:

Yeah. Fair enough. I'm not trying to jump on your roadmap. I just know that every company, every real estate agency seems to have their own definitions and we go very granular because there isn't any commonality across data terms in the commercial space.

Steve Carulli:

Sure.

Kylie Davis:

And so because there's no commonality, it's really hard to know, to compare apples with apples and to understand what you're dealing with, which means that you therefore lose the insights because you can't actually see things clearly. So if everything is starting to ... If we can come up with that common framework and lexicon for commercial data, it will improve every ... I know people hang on to their data definitions because they think that's their IP and it makes their data special. But no, it's your insights and your ability to action those insights that makes your data special, not just the fact that you've got a different title heading on the column of what things are called.

Steve Carulli:

Yeah, I agree. And it's been interesting in the commercial space because it's really only been the Property Council who have been, if you like, that central focus for commercial data. Not everyone in the market is a member of Property Council. So by virtue of its own membership limitations, it's not seeing a market-wide representation. What we're hopeful of, and you never expect to get total domination, but if you can get a big enough piece of every market, then it's very easy to put together some really quite insightful and detailed analysis that we know just won't be available anywhere else than in the analytics that a system like this produces.

Kylie Davis:

Fantastic. So what does the future look like for Cirrus8, Steve?

Steve Carulli:

Look, it's exciting times for us. Its growth, we're in that hyper growth phase so we're through the startup ructions and the inertia there, and it really is just continuing to grow our user base. We've got some exciting plans with respect to taking things offshore and getting into different markets. Australia first and for foremost is really our focus because we just feel we're in the Southern hemisphere, we're far away from the rest of the world, we, kind of, we think get neglected a bit by some of the bigger groups out of the US or Europe. So the focus will always be on continuing to grow a footprint in Australia, but we know it's come organically. We're getting lots and lots of inquiries from all over the world now where people are just looking for a better mouse trap, something that they can use. They've heard good things, and yeah, so it goes.

Kylie Davis:

Yeah. Awesome. So look, Steve, it's been absolutely a pleasure talking to you. Thanks so much for telling us all about Cirrus8.

Steve Carulli:

You're welcome. Thank you for asking. Yeah, it's great.

Kylie Davis:

Thanks. Okay. He's the outro, Charlie. And that was Steven Carulli from Cirrus8. And I'm going to confess that I love these stories of a frustrated person in industry with decades of experience decides to hell with this and invents his or her own software that shows how it should be done. Commercial property is a big high stakes game, and the successful players in the commercial PM space have enjoyed market share for a long time because of the high barriers to entry that previously existed around developing tech stacks. But cloud-based tech has changed all of that, and it's something that we've seen consistently across the residential space that I think commercial can learn from.

Kylie Davis:

Around seven to 10 years ago, there was a flurry of innovation in PropTech startups, experimenting with this new cloud-based computing and the options around building technology that the industry desperately needed, and which showed exciting new ways that things could be done. At the time though, the big players were all stuck on their legacy systems, and it has taken literally years and millions and millions of dollars to move off those platforms. In the meantime, though, those startups have become rapidly growing scale-ups, winning significant market share off the bigger players and showing property owners, agents and property managers how they can streamline their processes, take ownership and advantage of their own data and reduce their workloads.

Kylie Davis:

And this is one of the reasons why we're seeing so much M&A activity in the residential space at the moment with big acquisitions by Domain, REA, MRI and CoreLogic because the PropTechs are maturing into viable-scales up just as the big players are also becoming more cloud-based themselves and able to more easily embrace new technology into their own stacks. So my prediction is that we're going to start seeing similar activity happening in the commercial space once the incumbents wake up and realise that they're being disrupted just as much as any agent or property owner out there. So look, great work, Cirrus8 team. It's great to see another Perth-based PropTech scoring goals.

Kylie Davis:

Now, if you have enjoyed this episode of the PropTech podcast, I would love you to tell your friends or drop me a line either via email, LinkedIn or on our Facebook page. You can follow this podcast on Spotify, Google podcasts, Anchor and Apple iTunes. I'd like to thank my podcast producer, the fabulous Charlie Hollands, and our sponsors, Direct Connect, making, moving easy, Dynamic Methods, the name behind Forms Live, REI Forms Live, and RealWorks, and the PropTech Association of Australia, Australia's industry body supporting the flourishing PropTech community.

Kylie Davis:

Now, if you're an Australian or a New Zealand PropTech who would like to be on the show, drop me a line by LinkedIn or kylie@proptechassociation.com.au. Thanks, everyone. Until next time, keep on PropTeching.