Fifth Wall CEO Brendan Wallace spoke with me about what went wrong with proptech, which boomed for a few years starting in about 2017 and then bombed, much like dot-coms did from 1995 to 2001.
His main point was that investors flooded the space with more capital than could be smartly deployed, resulting in unsophisticated asset managers funding bad business models.
Fifth Wall itself was part of that story. It invested in some startups that proved to be winners, such as ServiceTitan and Industrious, but also in notorious cash furnaces such as Opendoor, Doma, Blend, Hippo and SmartRent, as Hiten Samtani of The Promote reminded me.
Of course, the vast majority of venture capital bets fail. If you bat .100 but your hits pay off big, you make the Hall of Fame. And even if a company never becomes profitable, early investors tend to make money if it goes public or is acquired before it crashes.
Take Opendoor, for example. It went public in a 2020 SPAC merger and traded in the $30 range for a while. But it consistently lost money on home flips even during the pandemic buying frenzy, as did other companies that used algorithms to estimate what price a home could fetch. Today a share of the iBuyer’s stock costs less than the cheapest slice of pizza in New York City.
Doma, previously known as States Title, went public in 2021 in a $3 billion SPAC deal. When mortgage originations collapsed the following year, so did Doma’s market capitalization and headcount. A chart of its stock performance, like those of the aforementioned money-losing startups, looks like a good launch point for a hang glider:
Hippo, too, went the SPAC route, scoring a $5 billion valuation. Its CEO later told Fortune it was a mistake not to do a traditional IPO. At that point, the insuretech’s valuation had fallen by 93 percent. Its market cap is now $639 million. SmartRent’s share price peaked at $13 and now hovers around $1.60.
In this volatile environment, Fifth Wall appears to have done well — judging from its ability to continue raising hundreds of millions of dollars.
That said, in venture capital, we don’t know what anyone’s batting average is. If only everyone’s statistics were public — like in baseball.
What we’re thinking about: Does Gov. Kathy Hochul really believe that institutional buyers are driving up the price of single-family homes, or is her proposal to ban them just an attempt to improve her approval ratings? Send your thoughts to eengquist@therealdeal.com.
A thing we’ve learned: Condo developer Shiraz Sanjana was temporarily banned in 2014 for misdeeds at a Harlem property, but came back with a project at 695 Sixth Avenue in Park Slope and has apparently done others since then. His website shows quite a few completed, modest-size condos, but he has stayed below the media’s radar.
Elsewhere…
Over the many years that I covered politics, I came to realize that the entire industry (yes, it’s an industry) revolved around an enduring mystery: voters. Why do citizens bother to vote, and if they do, for whom?
Consultants scrutinize polling data, interviews with voters and election results in a never-ending quest for the answer, which changes with every race — and is different for every voter.
That’s clear in this Gothamist story by Brigid Bergin, who interviewed voters in Rep. Alexandria Ocasio-Cortez’s Queens district — where Donald Trump did a lot better in 2024 than in 2020, notably among immigrants.
Not recent immigrants, but rather, those who believe they are entirely different from today’s migrants. Here’s how one expert described them in Bergin’s piece:
“This is the current generation of Archie Bunker-like people,” said [CUNY’s John] Mollenkopf, in a nod to the 1970’s era sitcom ‘All in the Family,’ set in a nearby Queens neighborhood and following a working-class family patriarch who struggles with racial and demographic shifts in his neighborhood. “Blue-collar, home-owning, solid citizens who basically register as Democrats but are alienated from the Democratic nominee.”
To some observers, the reasons people give for voting for a particular candidate often seem flimsy, misguided or uninformed. They always remind me of a famous line attributed to Winston Churchill, although there’s no evidence that he ever said it: “The best argument against democracy is a five-minute conversation with the average voter.”
But cynicism has no place in politics. The point is to win elections and enact your agenda.
Bribery and fraud charges against former Lt. Gov. (and developer) Brian Benjamin were dropped, the Associated Press reports, because the key witness against him, a relatively obscure developer and landlord named Gerald Migdol, died in February. Migdol had also been indicted, way back in November 2021, and pleaded guilty the following year. Benjamin resigned that same year.
Closing time
Residential: The priciest residential sale Tuesday was $9.5 million for a 3,166-square-foot sponsor-sale condominium at 15 Hudson Yards. Corcoran Sunshine’s Marko Arsic, Jason Lau, and Richard Hottinger had the listing.
Commercial: The most expensive commercial closing of the day was $13.3 million for a 22,455-square-foot, 25-unit apartment building at 182 Eagle Street in Greenpoint.
New to the Market: The highest price for a residential property hitting the market was $24.25 million for a 4,492-square-foot, sponsor-sale condominium at 111 West 57th Street in Midtown. Nikki Field and Ben Pofcher of Sotheby’s International Realty have the listing.
Breaking Ground: The largest new building application filed was for a 20,831-square-foot, four-story community facility building at 84-50 Abingdon Road in Kew Gardens. Mark Aminov of Aminov Design Engineer filed the permit.
— Matthew Elo