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Story of Berkadia’s silver bullet for CRE markets and how to say “yes” to innovations when you work for a large corporation.
Yulia Yaani:
Hi, I’m Yulia Yanni, CEO, and co-founder of RealAtom and our new episode of innovation slash technology slash commercial mortgage podcast. I am hosting Eric Flohr, who is Senior Vice President, Transformation at Berkadia commercial mortgage. Eric, welcome.
Eric Flohr:
Thank you for having me Yulia
Yulia Yaani:
As usual. I’m asking you to tell us about your background, about your dogs, about your kids, about your guitars, and how did you get to be an SVP of transformation at one of the largest commercial mortgage players in the industry?
Eric Flohr:
Of course. Well, thank you for the kind words of Berkadia. So I started my career as a management consultant and I spent seven years working at Deloitte consulting. I was very fortunate. I was able to work in multiple different countries around the world. I spent some time working in Europe, spent some time in Latin America, North America, obviously as well as Asia. After that, I also spent some time working in the Middle East for a family investment office, which was looking to make investments in emerging markets. And then after having spent probably 90% of the previous eight years traveling in either hotel or in an airplane, decided it would be nice to actually live in my own home for once. So I relocated back to Philadelphia and began working at Berkadia. My role at Berkadia is quite broad. I’m very fortunate that I’m able to touch all parts of our organization as well as work, quite closely with a number of our lender partners and outside clients. I am responsible for helping to lead our digital transformation and that involves managing our engagement with the prop-tech community and our be engaged startup accelerator program. I’m also responsible for working very closely with our business leadership to help re-engineer processes, to make sure that we can take advantage of technology developments. And then I also have a team that works for me in our offshore location in India, which is responsible for driving process improvements in our location in hydro bed.
Here is this cultural change that’s happening within commercial real estate. We’re realizing the future is going to be different and people are much more willing to do things differently than they did in the past.
By Eric Flohr
Yulia Yaani:
I guess that’s how you got your elephants on the background, right?
Eric Flohr:
Correct. Correct. Every time I go to India, my team is kind enough to give me a gift and I think I’m building a herd of elephants in my office.
Yulia Yaani:
Well, you will be one of the luckiest people in the world, you know, elephants bring luck. Right.
Eric Flohr:
I hope so. And certainly after the way 2020 was, I think we could all use a little bit of luck.
Yulia Yaani:
Well, that’s true. That’s true. So tell me, tell me a little bit more about the innovations and transformations that you are doing within a Berkadia, because I assume it’s very challenging, especially within larger organizations. So tell me a little bit more about the program first about what you are doing within the program. And then we can talk, you know, more about that. Of course,
Eric Flohr:
You know, you highlighted one of the things which is very near and dear to the innovation community, which is a lot of times the larger, more incumbent organizations can struggle with innovation. And in some cases, whether it be cultural resistance or individual resistance can actually really put in jeopardy an innovation program, you can contrast that though with startups who may have great ideas and the freedom to do all sorts of really cool, interesting things. But then the challenge is the lack of capital, the lack of scale, the lack of resources to actually execute on those. So it is, it is a challenge. And so after Berkadia, I think we’re doing some really interesting things, not only to help drive change within Berkadia, but also address some of those cultural conflicts that you might find and trying to innovate at a large organization.
We are working very closely with a number of our borrowers and a number of our clients to try and make sure that the overall transaction process with Berkadia is a very smooth, frictionless experience. When you think about a commercial real estate transaction, there are dozens of stakeholders who participate. There’s a lot of documents, there’s a lot of email traffic, and it’s very difficult to know from an end-to-end standpoint, how long has the deal taking my deal at? I’ve constantly got to provide more and more information and documents to get that deal done. So we’re trying to develop ways to eliminate some of that friction and make for a much more seamless client experience. We’re also looking for a way, can we use the scale that Berkadia operates in we’re national across the US in almost every major city we’re present in investment sales, multi-faith mortgage banking, as well as servicing, can we leverage the data and insights that we collect and really help our clients make more effective and efficient investment decisions in terms of when they might want to dispose of an asset versus refinance? What particular markets might they want to finance in? Where might they want to finance? And then finally, once we have a signature on the dotted line, we’re working to make sure that as we close that transaction and ultimately end up servicing that transaction, that our client has the absolute best possible customer experience.
Yulia Yaani:
So let me ask you a tricky question. Do you see your professionals, Berkadia professionals, either investment sales or mortgage brokers or agency originations? Are they just, you know, producers or are they also advisors? Like, is there a goal, you know, just to close the deal or their goal, you know, to build relationships and, you know, be useful to their clients in any other capacity?
Eric Flohr:
That’s a great question. And I would say that’s an area that we’ve seen a tremendous amount of change in the last five to 10 years. You know, I think what a mortgage banker or an investment sales advisor was 10 years ago is much, much different today. And there’s a couple of reasons for that. One is the client basis continued to consolidate you now have very large owner-operators are at national scale, which in some cases may not even have been present in the multifamily space three to five years ago, you’re seeing a much greater and widespread availability of data, which means in the past information that you may have called your investment advisor or your mortgage banker for you don’t need to do that cause you can actually find that on your own. And so what’s that meant is our producers can no longer just be order takers but they actually need to evolve their role to become more of a capital advisor.
And in some cases that may mean that we delay a refinancing. We don’t actually put a property on the market and provide that advice, knowing that it’s going to create more value for both the clients. And then ultimately Berkadia in the long run versus saying, let’s just focus on closing that transaction today. And that’s certainly an evolution that the industry is going through. And my personal belief is if you were an investment advisor, a mortgage banker, and you’re not in that advisory space, I think you’re going to have a really hard time retaining clients three, five, seven years out.
Yulia Yaani:
So, I understand that shift from just being ordered to take, to being an advisor, how does your innovation transformation pro processes contribute to them being those valuable advisors?
Eric Flohr:
That is a big focus of ours at the moment. And there’s a couple of ways that we are trying to do that. One. As I mentioned earlier, we are really trying to use data that we collect about a property or transaction and supplement that not only with a lot of the traditional data and information that a commercial mortgage, a commercial brokerage may have, but also look at alternative data points. Are there data points that we can collect from say a credit agency? Is there information that we can get from a company, which is in the IT space that would help us better understand what potential capital improvements may or may not need to be made based on the performance of say, HVAC equipment or water equipment in that building and really help our clients get a much more granular understanding of that property, its current operating performance as well as what potentially it may operate in the future.
That’s a lot of the areas where we spend their time and really try to give those insights for our producers to provide that advice. We’ve also tried to break it down to the degree possible. Any barriers internally within collaboration? I know you’ve mentioned at the beginning of the podcast, some of the challenges around larger companies’ innovations, unfortunately, sometimes there are silos and priorities and things like that. We’ve tried to break those down as best we can to make sure that we’re giving the answer, which is best for the client and not necessarily what may be the best for that particular business unit of Berkadia at that particular point in time. And then third, as I mentioned, we’re also trying to make it very easy to do business with Berkadia. Can we get to a point where if you’re thinking about listing a property with us, it’s not a two, three, four, five-week process to get that listing created, but we can actually turn that around much faster because we’ve made it easier for you to interact with us, but we’ve also made it easy so that when we get that information, we have the tools, infrastructure, processes, and resource to quickly turn that around and get that back to you because today with how fast the market’s changing if there is a very unique insight, often the shelf life of that is very short because someone else is going to find it and they’re going to act on it as well.
Yulia Yaani:
So let me ask you about running an innovation program. I understand that you guys didn’t start today, so you’ve been doing good for some time. So what, from your perspective, is the most important thing to get right in your innovation management program when you’re starting at and when you’re progressing was that?
Eric Flohr:
Wow. So now the tough questions begin. It was easy up until now. So it would be very tough for me to limit it to just one thing, but I’ll try not to give a lanching list and scare anyone who maybe hasn’t gotten started. I would say first is our for actually back to a book I read when I was a child. There was a book I read that said, if you don’t know where you’re going, you’ll end up somewhere else. And so I think that’s actually very applicable to innovation efforts is
Yulia Yaani:
We’re going to quote you on that, right? Yep, absolutely.
Eric Flohr:
You can quote me on that. So you do need to have a good idea of where you’re going. There are some people who say, you know, there’s innovation and it’s very unpredictable. You need to constantly be pivoting and adapting and adjusting based on feedback and users, market developments completely agree. But if you do that, you’re just going to be like a tailbone in the wind and you’re never actually gonna get anything done. You do need to have a good idea of what that end state looks like? What are we moving towards, but then allow enough space that you can slightly pivot, adjust, reprioritize as needed. But I am a very firm believer that if you don’t have an idea of what the future in the state you’re striving for is going to look like at a high level. You’re not actually going to produce meaningful results.
You’re just simply going to change priorities every 90 days, every 180 days, and not actually get anything done. So I think that is one of the big things is really think about what does that future state look like? How can we define that as a high level? How does it impact their business? How does impact our clients? How does it impact users? How do we potentially organize ourselves differently to execute and move forward? And then along with that, because you’re are asking people to do things differently, let’s be honest, particularly in the multi-family space the last 10 years have been great. And this is a Warren Buffet’s quote. So I’ll give credit to him. You know, but the rising tide does lift all boats. And so it’s very easy for people to say, well, I don’t need to worry about this. Everything’s great. You know, my phone’s ringing off the hook. Why do I have to worry about trying to shift to be an advisor? Why do I have to learn how to use this new tool? Why do we need new processes?
Yulia Yaani:
So, so, so sorry for interrupting you, but you so right? Because we are hearing this all the time in, across the industry, people saying and making a lot of money, right? Why do I need to bother about innovations? Why do I need to think about new technology? You know, my checks are coming in, I’m closing the transactions.
Eric Flohr:
You’re absolutely right. And, and it can be a tough argument. And I think if anything COVID was a terrible event for the world. It had a personal impact on a lot of individuals and, and terrible personal impact. However, I think it opened a lot of people’s eyes that things can actually change really, really quickly. It really can change at the snap of fingers. And so if you’re not prepared for that, then you’re going to be left behind. And this is a little bit downstream from Berkadia space. But you know, I think of myself when I own a home, but if I were interested in renting and in the past they have rented, yes, I needed to see the leasing agent. I needed to take a tour of the property. I needed to see the unit. I wanted to experience some of the amenities before I made my call.
And that was everyone up until March of 2020, and suddenly March 15th of 2020 as worked from home. And, and those sorts of things they had home orders were put into place you end up with, well, we actually can’t have a leasing agent give a tour. What do we do? And companies who had started to build some of those 3d capabilities or maybe virtual reality, or started investing in self-guided tours, which was kind of a crazy idea. 18 months ago, suddenly were able to pivot very quickly and able to say, wow, I’m actually driving the higher outcome, which is a greater likelihood of my prospect signing a lease. And it’s actually lower costs because I’m able to use self facial recognition technology to get people into the unit. I’m allowing it to be a self-guided tour. You know, maybe I’m allowing people to use the iPhone to check-in at different spots and get access as they go throughout their tour.
They can do it at their own time and leisure. It doesn’t have to be coordinating between somebody who’s working 60 hours a week. And my leasing agent, who’s got other appointments. They’re actually able to get higher outcomes. And again, if you didn’t invest in that when you were six months behind scrambling trying to get that organized and people who did, were actually able to, to move very quickly. And so you know, I think that resistance, you mentioned, which certainly we’ve heard experienced in the last five, 10 years. I suspect going forward is going to be a little bit different because people realize if you aren’t proactive and you don’t make some of these investments, you can be really caught off guard when there is a market shift.
Yulia Yaani:
So interesting. I think you started talking about the obstacles that, you know, you’re facing within introducing innovations and transforming how people think, but how do you address those obstacles?
Eric Flohr:
Sure. So I would say I don’t think there’s a silver bullet. I think it actually takes multiple different methods to try and address that. Some of it is we’re also undergoing a cultural change at Berkadia and a lot of it is really trying to understand and align around what are the objectives you’re trying to achieve. And so usually if I put you in the shoes of one of our investment sales advisors is one of your objectives to use technology. Is it to always be at the cutting edge of technology? Probably not. Your objective is how do I close more deals? How do I, how do I be more successful? And so you, you can’t go with, sometimes some of us technologists can fall into this. I have this great new tool. And let me tell you about all the features of the tool that generally gets pretty bad reception.
It’s more, let me tell you about how this can actually help you close more deals, be more competitive in the market win new clients, let me show you some things maybe that you don’t know about the market, or you don’t know about a new client. Let me prepare you for that first meeting with the new client and give you some more insights that before you might’ve had your analyst, or maybe one of your marketing assistants spend three, four days preparing a lot of material for you just to get up to speed, let alone the content you’re actually presented to the client. We can now click some buttons and actually empower you with that information right away. Do you want to see that data differently? Okay, great. Let me slice that data differently. So I think it really is, you know, trying to link and understand what are the objectives that that individual is trying to achieve and how can you tailor what you’re working on to them.
Secondly, we’ve also had really great success at changing incentives and compensation as well to really drive this. So for example, if you’re an analyst, you now need to go through a certification program that you can demonstrate capabilities that you can use. A lot of the technology we built for you to progress to a senior analyst and ultimately onto an associate mortgage banker say for example, and that’s obviously driving people to, they want to get to the next level. They’ve got to show that another thing is I think constant communication of success stories, and we are constantly preparing our executives with next time you’re talking with the producer, here’s an example of a success story you can use. We have community structured communications that we send out to our company with success stories. We, in some cases even share those with our clients as well and really try to celebrate. Here’s an example of where someone may be in a really competitive situation. They were either able to respond to the client faster, or they had deeper insights because they’re using some of the tools we’re building. It was a much more seamless client experience. And as a result of that, we generated, you know, X in terms of fees or that clients become very loyal to us.
Yulia Yaani:
Well, let me ask you in, sorry for interrupting. So I mean you can influence analysts this way. You know, they are impressionable young things, right? They want to progress in their careers, but you know, do you, producers, you know, hardcore that been in the industry for 20 years, do they really buy this thing
Eric Flohr:
And I’ll tell you, it, it does depend. But you know, the things that we’ve tried to tap into are typical if you’re a top producer, you constantly want to be on the cutting edge, you have you’re just you know, I’ll use almost an athletic analogy. You know, you’re like Tom Brady, you know, you’re constantly like, what can I, yes. Maybe I just won the super bowl, but what can I do to win it again? What can I do to go to another team and win the super bowl? And so if you can find a way to tap into that, to say, yes, you are a number one, or number two, or number three mortgage banking team, but you know what, you still only close 12, 15%, 20% of the loans that you quote. What if we could make that 3% higher, 5% higher than translates into an extra $1.5 million in fees.
Yulia Yaani:
So that, that then translates in an extra Ferrari, right?
Eric Flohr:
Correct. And so, you know, it’s interesting. We, we do have some of our top teams and maybe the producer themselves is not intimately familiar with every single field that we have in our CRM system or every single field we have in some of our tools or exactly where the data coming from, but they can understand it when it’s going to hit to their client. This is the value of working with Berkadia. We have all of these capabilities, other people don’t, this is why you should work with Berkadia. And then they drive that within their team and make sure their team is actually able to use that. And when we were in person we had a lot of the individuals who were responsible for helping roll out these technologies and these changes, they would routinely get phone calls from our top producers saying, I need you to come to my office and make sure that everyone in my office knows how to use this.
And you can really tap into that competitive spirit because then you go to, you know, say, you went to the number four producer and you met with their team and they’re all trained and using these tools, then you go to the number three producer and say, by the way, look at this person, you know, his or her, the team’s actually doing really well this year. They’re gaining on you. And here’s why, and, you know you need to come out to my office and really get my team excited and using this. So, you know what I say, that our top producers can go in and spend three hours a day using these tools. Honestly, the answer is probably not however there, they know it well enough. They can communicate that to their clients. And on top of that, they drive that culture throughout their team. So that way everyone on their team is getting involved in really helping push the ball forward.
Yulia Yaani:
So let me ask you, I’m a producer. They asked us, I mean, any company on the market, any of your competitors will be happy to have them. And do you hear this from them? Hey, if you bother me one more time was your move to Cushman.
Eric Flohr:
So you know, and I think it really is how you approach it. You know, if you approach it, there’s a corporate mandate, you must do this. You’re going to get resistance. And, and honestly, they’re probably not going to do it. But if you can link it to their goals, which again are more deals, more clients making more money. If you can link what you’re doing to that and communicate that value to them, what we found, it’s actually a retention tool, you know, as you mentioned, they are assets. They can move around. Generally, the teams will go with them. It’s not just one producer that moves. And so what you find is, Oh, well, if I did go to a competitor, I might not have all these tools. I would have to set up all this infrastructure. That’s going to take time. I’m going to be out of the market. That’s bad. And here at Berkadia, we’ve got all this infrastructure in place. It’s very seamless. You know, I can’t be as competitive without these tools in the market. And so, therefore, when someone does approach me, you know, I’m not as open as, as it might’ve been otherwise. And so we’ve, we’ve actually found it to be the other way of, it’s actually becoming a retention tool rather than an irritant that might cause somebody to look elsewhere.
Yulia Yaani:
Got it. So let me ask you a tricky question again: you guys are obviously smaller than some of your larger competitors. I mean, your half size in terms of revenue, then walk a down log, but I know that you started your innovation transformation program earlier than some of your other competitors. I mean, you have a team in India, you guys have a very strong team here. Do you think what you’re doing right now will help you to get ahead, and you know ahead of your competitors sooner than later?
Eric Flohr:
I think so there, there’s a couple of advantages that we have relative to some of our other competitors. One of those is a predominant focus on multi-family, which I think really simplifies what you need to do versus being able to support, say leasing for retail or office or things like that. Secondly, we are a privately held organization. Berkshire Hathaway is one of our owners that gives us a much different perspective. We’re able to really invest for the long term and invest for five, 10 years out and not necessarily need to manage earnings every single quarter to hit the results that we need. And third, our leadership is completely bought into what we’re doing. It’s part of our vision statement. Its part, part of our core values is that we innovate we take the long view, we stand for excellence, and it is even part of what we particularly on the corporate side, when we’re hiring is we do look for individuals who will embrace new ideas, will help us solve problems and help who the ball forward, not just someone who will, you know, sit at their desk and shuffle some paper around and, and preserve and defend the status quo.
And so I, personally, think for not only Berkadia, but I think for a lot of organizations this sort of effort is borderline existential. And if you’re not actually heavily investing in these sorts of efforts, you really need to think long and hard about what your business is going to look like five or 10 years out and get started very quickly.
Yulia Yaani:
And we’ll quote you on that. I love that, you know, existential program programs for the mortgage companies. Now I’m going to ask you something that is really close to my heart, and I would like to hear how you guys solve it. We all know that startups fail, but so we also know that new business models fail within larger organizations. So can you maybe comment on why new business models fail and how innovation management can help?
Eric Flohr:
Sure. It’s not easy to be an entrepreneur. I think that’s the new buzzword for an entrepreneur inside of a larger organization. I personally believe very much in Clayton Christensen’s work around the innovator’s dilemma and the innovator’s solution, which is a, and I’m paraphrasing his work. But briefly, if you have a new business model inside of a larger company, oftentimes that can be viewed as a threat to your existing cash flow. In some cases, resources are not assigned to that, or in some cases, it’s viewed as threatening to the legacy business. And so it’s always struck fighting for the attention it needs. It’s always fighting to get the resources it needs. Also, oftentimes companies do layer on a lot of very heavy overhead and infrastructure and policies, procedures, systems, requirements that can really make it difficult for an innovation effort to really take off.
And so I think some of the things that we’ve done in Berkadia successfully is when we’ve had some new ideas and things like that. First, we’ve incubated them. A lot of times, they may start off in our innovation group, and then as they prove themselves, they may migrate actually over into what is an established business. Secondly, we do a lot of pilots. We try to keep these very lightweight, very quick, very low investment to say, here’s a concept. What is the true minimum effort we need to put in to see if this concept works, get feedback from customers, get feedback from users, see how the market is viewing that, and then potentially pivot or shift based on that feedback, as opposed to saying, Hey, we’re going to spend three years building something and then release it. And if it doesn’t work well, we’ve just wasted millions of dollars and a lot of time.
But we really do embrace that piloting. And then I think another thing that you really need to do is be very clear-headed about your success criteria. It’s much easier to do that before you launch the effort. When you spend a few weeks or months in the pilot, you’re starting to see some traction, but maybe it’s not taking off quite as much as you think, you know, that sunk cost trap really becomes real. And it’s well, if we just hang in there if we just do a little bit more, yeah, we wanted 10%, but 8% close enough, you start becoming really biased. And so I think you really need to set those performance criteria upfront, and then lastly, you need to make it okay. In your culture to fail. There are new ideas that aren’t gonna work. There are ideas that are ahead of their time.
Things aren’t going to play out the way you think. And so if you make it such that you can’t fail in your organization, you’re gonna end up with two outcomes. Either one, no, one’s going to have a new idea. And so they’re just going to sit tight or even worse. They’re gonna do their best to make a failing idea. Look good. And so that’s going to prolong the investment, prolong the decisions and ultimately lead to a not good outcome. And so you really need to culturally make it okay to fail, but fail fast, celebrate that, Hey, we had someone who had an idea. We tried and didn’t work. They stood up, they recognized it. They admitted it. They’re moving on. We’ve got something else for them to do. And that’s okay. And if you don’t do that you know, you really do lead to some really bad outcomes where you’re going to pour millions and millions of dollars and years of effort into something that someone knew six months after launch. This was not going to work. And so I think you really need to balance some of those factors. If you’re going to introduce new business models or truly disruptive innovation inside a larger organization.
Yulia Yaani:
You mentioned that you’re piloting your new ideas, and I assume you’re piloting them with real users, right?
Eric Flohr:
Generally. Yes. Yeah. We’ll either do that internally. In some cases, we may approach some of our borrowers or potential sellers on the investment sales side saying, Hey, here’s a new idea, a new concept. We think it’s going to make your life easier. Everything’s going to make our life easier. Would you be willing to do this? They say no, and that’s completely fine. But in most cases I would say we get a very good reception and the number of times we get that reception, it’s actually going up the last few years. And again, I think it’s because there is this cultural change that’s happening within commercial real estate. We’re realizing the future is going to be different and people are much more willing to do things differently than they did in the past.
Yulia Yaani:
And that’s what I wanted to ask. I mean, you, you said that you’re getting better reception. I mean, if you constantly test new ideas, don’t those groups become fatigued with, you know, testing for you.
Eric Flohr:
So, you know, that’s, I would say that’s the benefit of being a large company is we have, you know, hundreds, if not a thousand plus customers that we can go to. And so we do try to look at different factors when we figure out who to approach. So that way we’re not overloading someone, prioritization is important. Even at a company like Berkadia, or even some of our larger competitors, you can’t solve every problem every day. But what we found is if you craft an effective value proposition, you set the right expectations. You try to minimize the amount of time and effort they need to put in, and you work through, say your producer, to have that conversation and facilitate the introduction. Then most of the time you get a very positive reception.
Yulia Yaani:
Thank you. And the last question for today. Without giving away corporate secrets, please tell us what is the new frontier that you are trying to solve, or what is the next problem that, you know, you’re trying to tackle right now?
Eric Flohr :
Sure. So I would classify it as how do we effectively distribute? Actually, I want to start over on that question. So I’m giving you, I’m giving you a bad answer and the spam guy’s been calling me like 10 times a day from the same phone number. It’s very distracting. So let’s see. How would I explain that without letting another company go through? So actually out here, here’s what I, here’s, what I can say is we’ve talked a lot about the importance of insights and we’re really trying to put actionable insights in the hands of our producers who ultimately will help our clients to make better investment decisions. And there’s a lot of really great information out there, but it’s not necessarily collected in a timely fashion, or it’s not necessarily the easiest format to digest. And then there are also some really new or emerging data points that we think can provide very insightful information to the market.
And how do you bring those two together where there’s the data that the industry has used for a very long time to make decisions. And then there’s some new emerging data being available that we think could be more timely as well as could help with being more forward-looking maybe than what we’ve traditionally looked at, but it doesn’t necessarily have complete coverage. It’s not necessarily a format where it’s very easy to compare to what we’ve done. And as we’ve talked about earlier, it can be a little challenging sometimes to change industry standards or the status quo. And so how do you actually bring that together and make that happen? Not something we figured out yet, but hopefully sometime in 2021, we’ll have it figured out
Yulia Yaani:
Good answer, you didn’t say anything. And then a new section that I’m introducing today. I want you to know, my speakers, to talk about one startup on the market and not RealAtom, of course, that you think will you know, bring a lot of change to commercial real estate, to commercial real estate mortgage space.
Eric Flohr:
Yulia. We launched a startup accelerator program two years ago called “Be engaged”. The intent of the program is to help foster startups that we think might have something useful for either Berkadia or our clients in the future. And so we give feedback on their business plans. We help facilitate introductions to potential pilot users, pilot customers. We use the software in many cases ourselves and give very raw unvarnished feedback. We’re happy to help monitor their progress and, and at the right time, maybe potentially adopt and use their software internally. So one of the companies in our program that I think has some great potential is a company called Esusu. What they do is they work with owners and operators as well as tenants to have your monthly rent payment count as a credit qualifying event.
And when you think about what’s happening with access to affordable housing and then potential cases, there are some individuals who have a challenge in accessing credit markets or building credit based on the fact maybe they have hourly jobs and don’t qualify for pre-approved credit cards and those sorts of things. It can be really difficult for them to access the financial markets and financial institutions the Esusu works with those landlords. And Esusu has their rent payments captured and then reports those to the credit agencies, such that over a 12/24 month period if you pay your rent on time, you have 12, 24 months of credit qualifying events and can really make a meaningful increase in the credit score for that tenant, which provides all sorts of future opportunities. I think it’s a great, win-win both for the landlord who gets a competitive advantage in the market, a potential tool to retain tenants who might be more willing to move at the end of their lease. I think the tenant gets improved access to the credit markets and hopefully an improved lifestyle. And so I think it’s a true, win-win both for society as well as for the users of the application
Yulia Yaani:
Great model. I mean, it definitely has a lot of social impacts, and those users definitely can benefit from that. How do you spell the name of the company?
Eric Flohr:
E S U S U.
Yulia Yaani:
In how companies should apply to your accelerator and that, you know, I know we’re part of your accelerator, but tell him to tell us a little bit, because a lot of protected startups will be happy to do that. I’m sure.
Eric Flohr:
So I would say we’re generally looking at startups, which would have something to offer for the business, which is generally a multi-family transaction that could be a sale that could be your financing or refinancing or servicing of an asset or something that is directly related to how our clients, who are the owners and operators run their properties. We typically do want the company to have a product that has some revenue. We’re not generally looking at concepts or ideas but we’re generally looking for companies to have a product. They have some users who’re able to demonstrate some revenue. And then we’ll generally take that up until generally the point in time where they might be looking for like a series B or C, that’s kind of, you know, at that point in time, you’ve kind of outgrown the program. So we do not take an ownership stake. It is very much a kind of help you to help us type a program. And we think by helping these startups grow and thrive, that ultimately it’s helping the entire commercial real estate industry transform. And that helps both our clients, which means it’s also helping Berkadia.
Yulia Yaani:
It’s not that you not only take a stake in the company, you also feed startups very well. I remember those dealers
Eric Flohr:
We’re going to have a good lunch or dinner.
Yulia Yaani:
Good, good, good. I’m looking forward to, you know, meeting again in person and going for all those Italian dinners as well. Eric, thank you so much. It was so much fun to have you on my podcast. Again, I’m Yulia Yanni, CEO, and co-founder of RealAtom. And today my guest was senior vice president of transformation at Berkadia commercial mortgage, Eric Flohr.
Eric Flohr:
My pleasure Yulia. Thanks for having me.
Yulia Yaani:
Thank you. Bye bye.
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