VTS’s Nick Romito Is Riding High in Real Estate Data
Nick Romito got his first surfing sponsor at age 12, and was well on his way to a sun-drenched career riding the waves.
But when his college years rolled in, Romito, who would go on to co-found and become the CEO of VTS (formerly known as View the Space), received a sponsorship offer that left him with a difficult decision for a 17-year-old.
“My best friend’s dad was a successful commercial architect, and an amazing surfer,” said Romito. “I said to him, ‘What do I do here? Go to college, or sign a contract and surf?’ He was like, ‘You’ve got two options. One, you sign this contract. You’re gonna have a ton of fun, you’ll meet lots of beautiful women, you’ll see the best beaches in the world, and you’ll start your life at 32 years old. And that’s really hard. Or you go to school. You’re going to be successful and you’ll retire young and surf whenever the hell you want.’ That sounded like a way better option.”
This was the beginning of the journey that led to the formation of VTS, a leasing and asset management platform that currently manages 10 billion square feet of commercial real estate for over 35,000 users.
Romito, 36, a Toms River, N.J., native who lives in Chelsea with his wife, Leah Wyar Romito, and their 4-year-old son, Axel, spoke with Commercial Observer about how his company came about and the role it serves within the commercial real estate industry.
Commercial Observer: How did you get into real estate?
Nick Romito: After college — I went to Berkeley College in New York and graduated in 2005 — my best friend Ryan Masiello, who’s my co-founder here [at VTS], was a broker at Cushman & Wakefield. He told me, “This commercial real estate thing is pretty amazing. You can make a lot of money, and there’s no cap.” I wanted to create my own destiny, and brokerage is all about that.
You spent four years at MHP doing brokerage and asset management. Did you have any background in those areas?
So how were you able to do that?
Probably the worst thing about commercial real estate is the lack of training when you take a job. It’s literally, here’s a phone, here’s a database, start getting meetings. You pick up what you can from those around you.
You left MHP to run leasing and asset management at AM Properties. How did that lead to the formation of VTS?
We called it Titan Global Advisors, but it was really a subsidiary of AM Properties. I was there for almost four years. Probably midway through year three, I started getting asked pretty basic questions like, Do you feel tour activity in this building is going up or down? Or, are the rents we’re getting over the past six months trending in the right direction in how they compare to budget? This is where the initial idea for VTS came from. Everything was on spreadsheets. There was no way to easily understand the answers to those questions.
Ryan had just started agency work for Blackstone. I said, “If someone’s using technology to do this stuff, it’s gotta be Blackstone.” But he was like, it’s the worst, most manual process for me, too. So we said, let’s ask some other people. Maybe our friends at CBRE have a system. We asked them — no. And we’re like, OK, there’s something here.
We were taking our girlfriends, now our wives, to Italy for vacation, and we spent two weeks in Italy mapping out this entire thing.
Did either of you have tech experience?
So the two of you were looking at this from more of a functional standpoint?
It was a real estate problem we knew technology should solve, but we knew nothing about technology. When we came back from Italy, we decided to do this.
How did your wives feel about you spending your time in Italy working on a business plan?
They weren’t psyched, but we tried to do it after they had about three bottles of wine every night. Or in the sand, white boarding what a dashboard could look like using shells.
How did you get it started?
We engaged a company in India to build [a marketplace that used video and analytics to help landlords showcase their space]. My last commission check was enough money for the down payment of the web development contract, my rent, and an engagement ring. A client I put into space on Fifth Avenue gave me a desk, and for our first product, we had mapped out this entire VTS platform that you see today.
But what we realized was, if you’re a broker or tenant and you want to find space, there’s no easy way to qualify that space. If you’re lucky, someone shows you a floor plan. We felt that if you could show that person the space before they got there, and they still wanted to see it, that’s a qualified lead, and you save everybody a ton of time. We thought photos weren’t a great way to do it, because they didn’t show a true view of that actual space. We asked, what if we could find a way to do video that was so good that [everyone wants] to see the space and knows what to expect. So we built the initial concept around that premise: that we could build video for commercial real estate.
At this point, were you also thinking about the data functions?
Everything. But we felt like [it] was a really big ask of the market for us to [tell them to] start using software where they don’t use it. We felt we needed a precursor to help them baby step to using technology.
Video was lead generation. If you’ve got lead generation, it’s a huge value-add. We found a guy with a Steadicam, and as soon as we saw the footage, our broker lenses were like, “I would call that owner in a heartbeat.” We knew we had it.
We always presumed our first customers would be small owners, but it didn’t work out that way. SL Green was our first customer. They signed a contract with us for, I think, a couple hundred thousand dollars, then we used that to talk to investors. We raised about $600,000, and that videographer was our first employee.
How did that lead to the data business?
The reason we started with video was twofold. One, it was very low-tech. Just hit play. It also proved an ROI — we can prove the person who saw it came to the building. But it was also the perfect wedge with owners, because we said, “That video got somebody to the space. Where did you store their information?” We knew the answer — they stored it in Excel. We’re like, “That’s stupid. Why don’t you store it in the same place the videos live?” OK, fine. So we built that out. Three months later: “They sent you an offer. Where did that go?” Different Word document. That makes no sense. “Why don’t you store it in the same place the company and the video live, and we’ll show you how that offer compares to your budget.” Great idea.
So we kept leading them to water, but it started with this very simple video, which created the lead. If we’d just launched with this big software thing, we’d have brokers like, “Dude, what is this? I don’t even have an iPhone yet.” So it developed trust with us in the market in a really meaningful way.
Did you start out with a broad client base, or was there a golden goose client that helped you launch?
Not for video, but our golden goose client [on the data side] was Boston Properties. They used our videos and we said, “This is what we’re doing [with data],” and they were like, “This is a game changer. We firmly believe that if you guys can do this, it will change the market. We’ll sign a contract right now.”
What exactly were you offering?
Tracking the entire leasing pipeline, including who’s inquiring about space, touring, proposals, signing, and actually marking a lease as executed. All on one platform. They signed a contract, we delivered, and they’ve been one of our best partners. That opened the floodgates for us.
At this point, do you have any serious competitors?
Our biggest competitor today is still Excel. Hightower was our biggest competitor. We merged with them in 2016.
How did that merger come about?
We were bloodying each other’s noses for four years. They were a great competitor. I’d been on probably 50 panels with their CEO, Brandon Weber. We started talking, and at some point, we’re just like, we both have the same vision: to build a very big company that changes the market. This competition is forcing us both to focus on things that don’t matter. So if we put these together, the net’s going to be one plus one equals four. So we decided to do it. That worked out really well.
How did the merger change how the company functioned?
The amount of focus it gave back to us was significant. When you’re competing, you’re focusing on stuff that doesn’t matter. Like, “Oh, they released this little thing that no one cares about, we’ve got to build that.” These were things that didn’t matter or add value to anybody.
We’re hearing a lot more in recent years about proptech. What do you think the success you’ve had says about proptech as a whole?
I think it shows there’s a real market here. When we launched, the first venture capital conversation I had, in 2011 or 2012, [a friend who ran an angel fund] laughed at me. He said, “There hasn’t been one successful exit in your space.” Today, it would be hard to find a venture capital firm that doesn’t have a part of the fund dedicated to proptech. What we’ve done is validated the entire category.
Where do you see proptech heading?
There are a lot of companies trying to use machine learning and AI in different ways. Valuations is the big one — using all kinds of public data sources and applying machine learning to figure out the real-time value of an asset. I’m intrigued by that. You’re starting to see a lot of tenant experience stuff too: apps for the tenants to use to book rooms, order lunch, whatever. I like that sector a lot.
What’s next for VTS?
There are two products that are the next two parts of our vision. One of those is MarketView, which is where an owner can benchmark the performance of their asset compared to the market in real time. We’ll be the first ones to do this. You can see how your rents are performing versus your competitors, or how the tour activity for your pre-built space does compared to your competitors. It’s all anonymized and aggregate, but it’s a really accurate benchmark. We’re in live beta in Houston, and we’ll be out of beta next month. Then we’ll roll out to probably two or three more markets this year.
Then there’s our marketplace, truva.com. It’ll be [an] online marketplace for tenants to find and lease space online, and for tenant reps to negotiate and transact online with VTS’s other customers. We’ll be in beta probably in early fall.
How does collecting data in New York City compare to collecting data in the rest of the country?
Because New York City landlords are usually a little more sophisticated, it’s a bit easier, because they’re on a couple of standardized systems that we integrate very well with. But it’s also much bigger. So it might be easier to get the data, but you’ve got a lot more folks to talk to.
How are the brokers responding to the wealth of data you have?
They like it, because as a broker, it’s been a horrible experience without VTS. You recommend to an owner, “I see what’s happening. We should lower the rent.” And what happens next historically is, you get fired, the next team comes in, and the owner lowers the rent, because you had no way of showing that you were right. With VTS, they can say, “Look at the data. The data is telling us that we are out-pricing the market. We’re not converting proposals.” For a broker, that’s gold. Brokers are our power users.
We talked about Hightower. What happened with Brandon Weber? [Weber announced he was stepping back from the company in September.]
Brandon has been traveling the world for nine months. He sends me a text every week, and I just jealously look at his images of some different country. I would bet he’ll probably do that through the end of the year, and then figure out what he wants to do next.
Is he still affiliated with VTS?
He’s an advisor.
Did he leave on good terms?
Amazing terms. We talk almost every day.
Is there anything else you want people to know about VTS?
The amazing part of our story is, if you look at the impact we’ve had on the market thus far, we’ve done it with not a lot of capital. Prior to this year, we hadn’t raised a dollar in three years, so our bank balance was never over $25 or $30 million. Now it’s over $120 million. So we’ve got a lot of firepower to build more product than we’ve ever had before. All the impact we’ve had over the past six years, that’s going to multiply by five over the next two years. It’s going to be a fun thing to watch.
Editor’s note: In an earlier version of this story Romito had said that truva.com would be the first online marketplace, but there have been several earlier ones.