In early 2017, CBRE – the world’s largest commercial real estate firm with over 75,000 employees and 450 offices – acquired a little-known startup based in the Flatiron neighborhood of lower Manhattan. The Company’s name was Floored and by the time of the acquisition it had become one of the first to market with a commercially viable VR-based solution tackling the real estate market. The Company’s technology allows developers and agents to create VR renderings of housing units for sale – even before they are built – and to offer immersive VR experiences to prospective tenants or buyers.
Founded in 2012, the Company started by focusing exclusively on 3D renderings of units within listings but later shifted to offer virtual tours of real estate via VR – whether the real estate was built or not. In late 2014, Taconic Investment Partners listed a six-story building in Manhattan’s Meatpacking District and used Floored’s technology on an Oculus Rift VR headset to offer executives at Samsung North America an immersive tour of the still-in-construction unit. Shortly thereafter, Samsung signed a lease – representing one of the earliest uses of VR in a successful real estate transaction. Following that episode, Floored was used by Macerich Co. to aid in the marketing of locations in San Francisco and Philadelphia. Indeed, by early 2017, Floored counted nearly 50 of the largest real estate firms as customers – including The Blackstone Group, Vornado Realty Trust and Starwood Capital.
One of the more interesting aspects of the Floored business model and its ensuing success was the fact that Floored was built on top of the emerging class of VR infrastructure as a separate and distinct SaaS application. Floored utilized the Oculus Rift as the platform and focused on a SaaS “plus” business model whereby it charged a recurring monthly fee to host the immersive experience and accrued a separate consulting fee and leveraged its 36 engineers, 3D modelers and client specialists to spec out and curate content for such immersive experiences. The Company exploited a critical need within a large industry – in this example the need for “Showings” in Real Estate – and leveraged VR technology to create a meaningfully improved consumer and Agent experience. With a deep pool of potential customers, proven datapoints that correlate directly into financial impact and an asset-light business model driven by the quality of engineers and sales talent – Floored has become a powerful example of an enterprise VR startup with real revenue generation ability (in the near-term).
Just as discussed in class – with the concepts of growing businesses in the age of platforms – Floored has the potential to also become a VR-based “destination” for all things real estate – where it can extend its lead in 3-D interactive mapping technologies and offer listings of new rentals/sales, examples of how international renovations would look and feel and what a neighborhood would look like during a certain time or following a certain external renovation project.