The Data Death Star
A futuristic account of commercial real estate's information transformation
[Base One Podcast: Commercial Real Estate Data Series]
[2044‑03‑05 17:01:30.005]
EZRA BRIDGER: I’m Ezra Bridger. Welcome to our show, the Base One podcast. This is a great conversation today. But it’s a tricky one to introduce, because the guest I have has been quietly influential for decades now. And I think she is one of the most important thinkers now in commercial real estate. Certainly, she forged a path that a lot of other people said was impossible.
She’s got this funny quality of being in no one data medium in particular, but also somehow, almost everywhere. So what I wanted to do in this conversation was to understand the ways in which she created a cultural shift in commercial real estate data that no one saw coming.
Mon Mothma, CEO of TRA, welcome to the show.
MON MOTHMA: Great to be here.
EZRA BRIDGER: Now, it’s been a few years since I started my commercial real estate career. And I remember being trained on the leading data information tools of the time, like CoStar and a few others. These days, new hires have never heard of them. So tell me, Mon, what happened? Tell us the insider’s story.
MON MOTHMA: If we had to pinpoint a time when real estate firms started to shift their thinking around data, I’d go all the way back to December 2022 when OpenAI released the free version of ChatGPT. AI had been a buzzword for some time, but until ChatGPT, most people hadn’t realized the potential for it to transform how we work.
If you don’t remember ChatGPT, it was an AI chatbot that used natural language to improvise answers to questions. And it was really, really good. Not perfect, certainly, but like I said, it was the first time for many people to recognize the power of AI and large language models.
Eventually, ChatGPT and its competitors created versions of their software that were secure enough to be used with private data. This is where our origin story really began. Because in the real estate sector — commercial real estate, specifically — owners, managers, brokers, architects, you name it, started to care about their data. They invested time and resources into their data infrastructure in an unprecedented way.
Better infrastructure and increased data governance meant higher data quality. By having confidence in their data, commercial real estate firms started to use AI and LLMs to automate more and more tasks.
And then the Second Great Recession of 2032 hit. You remember how bad that was, right?
EZRA BRIDGER: I do. Can’t forget it. So what happened then?
MON MOTHMA: Well, commercial real estate firms started looking for ways to cut costs. By that point, they were so dependent on their data and AI that they couldn’t cut there, so they explored where else they were spending money. And of course, third-party data and research was the leading technology expense for many of these firms.
In particular, commercial transaction brokers began to compare their data to these third-party vendors. They realized that in many cases, their data was more timely and accurate. When the CTOs reported this up the chain, most CFOs were quick to suggest cutting third-party data completely. Of course, they couldn’t do that because of missing data from transactions their competitors’ brokered. At least, not yet.
By this point, all of the major transactions brokers — CBRE, JLL, Cushman, Marcus & Millichap, Colliers, Newmark — they’d all cleaned up and structured their own data in at least a somewhat consistent format. After all, real estate transactions are complex in their variety but simple in the sense that we use a lot of the same types of terms each time.
Anyway, this is where I came into the picture. I had worked at many brokers and was leading the data platform at one of the largest. I knew that if we could just collaborate, we would all benefit from our data. In other words, I wanted to turn our cost centers into profit centers. I worked with other brokers to create a data alliance. One of our staff, I forget who, jokingly called it The Rebel Alliance. The name just stuck. Now, of course, we call it TRA.
EZRA BRIDGER: That’s incredible. I’m sure it was no easy feat to get them to work together. And what an interesting collab idea, combining their data. How did you come up with that?
MON MOTHMA: The idea for TRA actually came from the Visa origin story. Visa was originally created by Bank of America as the BankAmericard credit card program. Not too long after, Bank of America spun off the BankAmericard credit card program into a cooperative with other banks, ultimately forming Visa.
EZRA BRIDGER: That’s why it’s so important to know your history, right?
MON MOTHMA: I say that all the time.
EZRA BRIDGER: I do as well. So for all of our listeners out there who are unfamiliar with TRA — although they’d have to be living in a cave if in the commercial real estate industry — tell us how TRA works.
MON MOTHMA: Certainly. The core of our first product, transactions, is simple. Any data that your firm contributes to TRA is up for sale. You will directly profit from any sales, and we take a minor brokerage fee. You know, we rarely see sales at the individual data point level, like less than 1% of transactions. Due to data privacy, we have little available there anyway. Brokers, software firms, or tech-enabled firms create aggregations of for-sale data, much like mutual funds in the stock market. That’s where we see 99% of transactions occur.
Smart contracts made it easy to track all of the disparate owners of data. And of course, the fintech payment processors simplified payouts. We wouldn’t have been able to build TRA had these tools not matured. In the same vein, the influencer and creator movement of the ‘20s deconstructed the way that we think about buying and selling content. That movement led to society questioning how we bought and sold in other areas. I’d be remiss to say that didn’t have an effect on TRA coming into existence.
And I should have mentioned earlier that we were extremely careful with how we structured TRA. We needed to ensure our independence in fact and appearance from the initial members of our coop. We didn’t want to get litigated away as an oligopoly. So we made our data platform open to any other “rebels” interested in selling their data. Owners, operators, lenders, managers, tenant reps, you name it — began joining forces. It was thrilling to say the least.
EZRA BRIDGER: The early days always are. I do want to touch on your point about litigation, but before we get into that, I have to ask… Wouldn’t there be some incentive for sellers to sell bad data on TRA’s platform? You know, to throw off their competitors? How did you build trust in the data?
MON MOTHMA: Great question. Certainly, data quality is and always will be of the utmost importance. TRA decided to copy the financial markets for this problem: we require brokerages who list data on TRA to hire auditors. C-3PO is our recommended option, which is the firm created by the merger of Crowe, PwC, and BDO. Each firm must pass the annual audit or be at risk of being delisted. We had seen other examples of tech firms who had sourced data from individual users and then required other individuals to validate that data. While we thought that approach worked well for individuals submitting data, we knew that we needed something more robust to entice large real estate corporations to transact in a big way. I know the audit process isn’t perfect, but at least it gives buyers confidence that an independent third party verified the accuracy and completeness of the data product.
EZRA BRIDGER: I’m guessing that having high quality data products on the platform was also important to TRA.
MON MOTHMA: That’s right. We had to build trust in the system. If we have buyers who discover the data quality is subpar — which we have from time to time — first, we provide them with an easy way to flag the data. Then, we work with the seller to validate the data, and if we find issues, we force them to have an immediate audit.
EZRA BRIDGER: Let me jump back to a few moments ago. You mentioned wanting to avoid litigation with TRA. There’s always litigation in business. Tell me, why did you call that out specifically? Was there something else at work?
MON MOTHMA: Yes, Ezra. As many of us elders in the industry remember, CoStar was the leader in commercial real estate information for decades. And there were several others in the space who had a significant foothold in various sectors within real estate. But if you asked real estate firms whether they liked most of these products, you almost always heard that they were “directionally helpful but not precise”, “expensive”, and “the only option”.
To be clear, these firms weren’t the only option in any sector, but they certainly eliminated a lot of their competition. And they did this via litigation, their superweapon. Our industry was known back then for snuffing out competition as quickly as possible. All’s fair if it’s legal, right? These firms thought they were doing their best to preserve shareholder interests. We at TRA, on the other hand, believe that collaboration is the real subsisting strength for organizations.
We knew that their plans would be to find a way to eliminate us, so we essentially “stole” their playbook by brainstorming all the ways in which they could defeat our little rebel alliance. Well, our alliance was little at the time. Anyway, we had some very smart attorneys structure our platform by thinking of all the ways that it could go wrong. “Invert, always invert” as the late Charlie Munger used to say. I have my R2-D2 set to repeat some of Munger’s best sayings throughout the day.
EZRA BRIDGER: What happened next? Did any of them sue TRA?
MON MOTHMA: Yes, of course they did. But we were ready. Court after court ruled in favor of TRA. But the old guards wouldn’t have it. They kept appealing, hoping their superweapon would save them. Holding a stance like that doesn't just introduce the possibility that you will lose it. It begins the countdown. Ultimately, it’s what did them in. After decades spent on legal fees and losses, the data Death Star finally imploded.
EZRA BRIDGER: That is quite the origin story. It’s still crazy to me how empires rise and fall. And your firm is the conqueror.
MON MOTHMA: Appearances and perceptions are important to TRA. And properly so. We are a cooperative that governs our platform by inspiration. I believe, and believe strongly, that TRA needs leaders that are part of the data buyers’ and sellers’ daily lives. Leaders that live in ivory towers might be more dangerous than no leaders at all.
EZRA BRIDGER: Well said. I have to ask; what’s next for TRA? And for Mon Mothma?
[END OF FREE TRANSCRIPT]
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