Interview Series #1 - Banker Turned Real Estate Entrepreneur

NiuShi's picture
Rank: King Kong | 1,042

For the next few weeks I'll be releasing interviews I've conducted with a few cool guys in the finance/finance-related space that also intersect with China. This is the first of the interview series.

The following is an interview that took place between NiuShi and an entrepreneur in the real estate space. The interview subject is in his mid-twenties and has a Chinese American background from a target school.

NiuShi: Thanks so much for taking the time to speak with me.

Real Estate Entrepreneur: No problem. Happy to chat a bit about my experience.

NS: Let's start with your current venture, and work backwards. Can you tell us a bit more about your real estate project?

REE: Sure thing. The platform basically provides a way for Chinese mainland investors, or speculators, for that matter, to have access to international residential properties. We don't list any properties on the Chinese mainland, though we do have some offerings in Hong Kong and Taiwan. The platform is still under development, but we have a few test users and user communities out there and it seems to be working great so far. But in a sentence: We connect mainland Chinese homebuyers with brokers in other countries.

NS: That's quite innovative. And practical on a number of levels. Do your test users make any comments about why they're interested in these properties? What's the driving force behind their purchase?

REE: I think it's largely the same reasons why you and I might be property - it's a safe value, generally speaking, if you do your due diligence and select a good location. As the saying goes, you'd rather have a crap house in a great neighborhood than a great house in a crappy neighborhood, right? But I think another reason possibly is that some Chinese families would want to move their assets offshore. I wouldn't really feel comfortable exploring that with our to-be clients, specifically, but if I had to venture a guess that might be one ulterior motive.

NS: I see. Makes sense you wouldn't want to dig too deeply there. To change gears slightly here, what skills or insights did your background in finance prepare you with that has allowed you to create your own online real estate company?

REE: It may sound lame, but generally, just an appreciation of how important numbers are when looking at investments, both from the opportunities side and also from the investment management side. Although our company doesn't make direct investments right now - though it's perhaps in our long term game plan - the numerical aptitudes I learned banking and then in real estate private equity are absolutely critical.

Most of my work now if more on the development side of things: managing programmers, meeting with real estate partners all over Europe, and advising our initial customers/clients on how to use the platform most effectively. But all these skills I was learning even in my first two and a half years banking.

NS: Would you mind explaining a little further please? About how the numerical side fits into those responsibilities you were just describing...?

REE: Take meeting with the real estate partners, for example. These guys are agents who we will connect our Chinese clients with. From the moment you walk into the room, I'm talking dollars and cents. These guys really just want to know how I can increase their revenue. And I suppose not be a huge time sink slash increase their costs. So because I have experience with balance sheets, transactions, and the real estate sector previously, I'm able to gain their confidence pretty quickly and make it clear we're on the same side, so to speak.

From the perspective of managing programmers, I've learned how hard I can push them while still getting great results. I am not, by any stretch of the imagination, putting them through the same sort of hours I did on my initial desk in New York, but I'm riding them pretty hard in order to move the project along. I only have basic training with programming and, it's true, I would be lost without these guys. But, and I hate to say it, much like banking analysts, there are other guys, or gals, who can take their place if need be. They're not irreplaceable.

NS: Got it. So it sounds like you are using both the quantitative and management skills you've learned and observed from your previous finance jobs. How big is the team?

REE: Quite small, actually. We have just 4 full-time guys right now. 2 are programmers and 2 guys on the ground in China working on business development. I like to keep the team small for two reasons. The first is quality control. The second is quality control. Well, and I guess the third is cost. Can't really avoid that one. Although online businesses are generally pretty time-sensitive, so to speak, I'd rather move two or three months slower and get the product really spectacularly done.

NS: On the same point as before - anything else you learned working in banking that has helped you be successful so far in your current venture?

REE: Yeah, I think being good at getting 'No,' as an answer. And I don't mean that one hundred percent in the terms of sales, but also just in the way that not everything happens the way you think it should. Or, you don't always get you want, right then and there when you want it. This is especially true with your personal time.

So sales or partnerships, whatever you want to call it. Those take time and leads and hitting the pavement and having conversations and all that. But your pitch gets better and your words become more confident. I even convince myself sometimes we have a good business. (laughs) On the other side, if there's one thing that banking taught me, it was generally that I couldn't really have what I wanted with regards to time in my life. Oh, I wanted to go out with my friends on a Thursday, well, too bad, I needed to stay in the office. I wanted to meet up with that cute girl from the weekend. Well, tough, you'll have to see her next Saturday.

The same is immensely true with being an entrepreneur. There is a pretty romantic view of entrepreneurs as guys who wake up, make themselves a pot of coffee, write a blog post or two, go for a long run, come back and work a bit more, have lunch with a friend, go into a personal office in the afternoon and crank out a bit more work, then laze around in the park in the early evening before retiring home to read a book and fall asleep or some shit like that.

Maybe that's the way some people make their money and live their lives, but for me it's not quite like that. Things are just as busy as before. Though maybe I make time for that cute girl if I can help it. (laughs)

NS: So how did you enter banking in the first place and why did you end up leaving?

REE: I guess I sort of came in through the, I don't know, usual way. I graduated from [Cornell/Columbia/Brown] and did the whole on-campus recruiting thing. Two interviews there and then more in New York. As for the second part, I'm currently in a gap between my previous banking job and a new one I'm scheduled to begin in the spring. I kinda figured this was my only chance to give this a shot and basically have about two more months to decide if I want to stick it out and build this company. It's looking that way so far.

NS: Any advice for students looking to go the same route? Insofar as joining the bank?

REE: Sure - the group almost matters more than the bank. I worked for [UBS/Credit Suisse/Barclays] and chose that bank over a perhaps more prestigious one because I thought the guys in the group were way more down to earth and less concerned with their image as a banker. They weren't all Ivy League guys, but I really liked that, because it meant to me they had earned their stripes. Working for dedicated, motivated guys who are interested in the work was really great. So yeah, really talk to the people in the group and get a sense of what they're all about, rather than leaping at the best name automatically.

NS: Great - thanks so much for everything. Good luck with the new company!

REE: No problem. Thanks.

[Note: interview has been condensed.]

Comments (5)

Nov 20, 2013

great content, thanks NiuShi!

WSO's COO (Chief Operating Orangutan) | My Linkedin

Nov 21, 2013

I'm not trying to troll here, but a question for REE is how much of the Chinese client base are government officials (or the relatives of them) looking to park less-than-legitimate money offshore? Offshore real estate is a common destination for that sort of money now, which doesn't say much positive about Chinese government officials' faith in the future of the Chinese economy, or at least their faith in sanctity of property rights.

See this wikipedia entry for the concept of naked officials: http://en.wikipedia.org/wiki/Naked_official

A lot of Chinese mainland spending in offshore property comes from these naked officials.

Am I passing moral judgment on REE? Not really. This is an investment trend and I'm not above making money off it myself.

Nov 22, 2013

Just a few questions I had. Not trolling as well. Just curious.

Isn't the Chinese government stepping up regulation on this? and couldn't them moving their cash into off-shore real estate also mean that they have more confidence in off-shore real estate growth?

You are probably (if not definitely) correct that a lot of offshore property comes from these officials, but in China the wealthy are getting wealthier and we could begin to see a trend start from this. What I mean is that the wealthy might want to start moving more and more of their assets off shore as well where there could be more growth potential and more lenient property right.

Jason Yeung
Rutgers Business School
Candidate B.S. in Accounting
Candidate B.S. in Economics

Nov 24, 2013

Hey guys - NiuShi here. I'll try to flip your questions on to REE and see what he says. Thanks!

Nov 22, 2013
Comment

Jason Yeung
Rutgers Business School
Candidate B.S. in Accounting
Candidate B.S. in Economics