Shaping Flex: Justin Harley chats 
Yardi, WeWork and the future of PropTech

Flex and The City had the pleasure of sitting down with Justin Harley, Regional Director at Yardi UK who's been at the forefront of tech in flex for over 23 years. Tucked away in the Speakeasy at WeWork's 10 York Rd, we delved into the world of PropTech, the monumental WeWork acquisition, and how and why Real Estate is running on Yardi.

You have have had a very impressive career. You sold your business, Hubcreate to Essensys in 2016 before then becoming sales director, and now you’re a Regional Director at Yardi. Tell us all.

Well, that's right, I did. I started a business in flexible workspace back in 2002. It was a piece of software designed to operate flexible workspaces, and I think it was almost ahead of its time. There wasn’t any software like it back then, and it was needed. We went around knocking on doors, literally asking, ‘Do you need something like this?’ Seriously. We built up the business, and it was great fun. We laughed a lot and cried a lot too, but we got it done. Then, in 2016, the time was right to sell the business, and Essensys kindly acquired it. So, thank you, Mark Furness.

As Yardi continues to do more and more in the flex space, I definitely appreciate the irony of Yardi Kube, our equivalent product to Essensys Operate, now competing with it. So, it’s quite funny.

There’s no doubt Real Estate is running on Yardi, and what can Flex learn from other sectors in Real estate. Which companies would you say you are most impressed with?

That’s really interesting. I still think Flex is relatively new. You know, it's been around for 20 years, but I still feel like it’s an adolescent, still growing up. But interestingly, Flex has always had the attitude that traditional real estate is a bit old-fashioned and slow. But what I’ve found is that it's not. Traditional real estate is willing to adopt technology, and it’s actually doing some very smart things with it.

If you look at parts of the real estate industry, especially residential—where institutional capital is investing in rental properties—they've created a brilliant resident journey. They’ve moved the entire process online, automating and streamlining it, and as a result, they get much better data. So they are able to make quicker, more informed decisions and ultimately achieve a better return on investment. Flex could learn a lot from real estate sectors like residential, where they understand and value data as key.

In Flex, I think we've sometimes been too busy applying quick fixes, like putting band-aids on problems, and as a result, the data may not be as reliable as it needs to be. And that’s a problem because, if you’re going to adopt any AI technology, you need a clean, accurate database. For example, if you instruct your AI to read something from your database and your database is full of cr*p, then it will spurn out cr*p.

The industry is becoming increasingly saturated, what would you say makes Yardi stand out as a leader in the PropTech market?

Well, a number of things. I think it starts with the scale of investment. Yardi invests 15% of its annual sales in research and development, and with Yardi's sales exceeding $2 billion, you can do the math, right? So, in terms of capital being deployed in PropTech, it’s phenomenal. Yardi is in an advantageous position because that capital is its own. It’s not external, so it’s not going to dry up, meaning we can keep accelerating faster and faster.

That said, there are some brilliant PropTech companies out there with great ideas. But I think the main challenge for PropTech is how they integrate with incumbent technologies to make their offerings work. And, of course, another challenge is how they make money. Yardi makes a profit, which I think is hard to do in this space. And, when you're a new technology company, not compromising your values is a real challenge because sometimes you have to ask, ‘where’s the next buck coming from?’ So, they might take deals they wouldn't necessarily take if they had more financial stability.

We know the Yardi name is massive in the US, how have you successfully established the brand's prominence in the UK since joining?

I'm still the new guy, right? In the UK, we have over 200 people, so Yardi UK itself is quite sizable, and we have over 2,500 people across Europe! So, Europe is a considerable market. In terms of establishing the brand, I think there are many different areas Yardi works in, and with the real estate investor community, the brand is very well established. I think the pension funds, the sovereign wealth funds, and the real estate investors all know Yardi and see it as the gold standard of real estate accounting.

However, I think in Flex, we still need to do more with our brand and can always improve. I believe people recognize the name, but they may not necessarily know what it stands for in terms of the culture, the size, and the sophistication of the business. One thing I’ve always found exciting about Yardi, even before I joined, was when I found out it was entering the Flex space. It's an industrial software company working in our space, which is exactly what it needs. It's long term.

A monumental moment this year has been acquiring a majority share in WeWork. Can you tell us a bit about this and what is the relationship between the two businesses?

Yes, the relationship is quite simple. The acquisition itself was made by the Yardi family. Yardi is wholly owned by them, and now so is 60% of WeWork. The businesses will operate completely separately. While there is a connection in that Yardi provides technology to WeWork, that’s purely as a customer. Otherwise, the businesses are quite different—one is a software company, and the other is a flexible office provider.

I think the key question here is why Yardi acquired that stake, and there are a number of reasons. Alan Yardi himself would say that flexible workspace is absolutely essential to commercial real estate. For starters, we had already made a significant investment in WeWork’s technology. But beyond that, he knew it would have been a major setback for the sector if WeWork had disappeared—it would have generated really bad press. So, I believe it was a matter of being in the right place to support and rebuild the business, bringing it back to where it needs to be.

The opportunity provided by Chapter 11 was key—an opening to clear its debt and renegotiate any problematic leases. So, watch this space. It’ll be interesting to see how it develops, and knowing how Mr. Yardi operates, I think it will be a long-term, well-thought-out strategy. But my question is—will there be free beer?

How do you think that technology and AI will impact the future of the flex industry?

I love what Yardi is doing with AI at the moment. They're doing a lot of clever work with chatbots and tools to scrape leases. That said, I do think AI is a bit overdone. Everyone talks about it, and everyone claims they're using it, but that’s mostly because they have to, that’s just how software works. The real question is, what are they actually doing with AI, and how is it being applied?

One thing I do believe will happen, and this is somewhat controversial—is that in five years, AI will handle the entire leasing journey. Of course, you’ll still need people who understand the leasing process, as businesses will have to continuously fine-tune their AI to improve and better the journey. I might be slightly conservative in saying five years, but I do think it’s something that will happen. AI is already embedded in areas like how inquiries enter the flex space and, for example, availability—that has AI written all over it. Ultimately, it comes down to how companies manage their AI, and the quality varies significantly. AI is very difficult to standardise and streamline effectively, and that’s where the real challenge lies.

Yardi offers so many products for different real estate sectors. How many are there and how do they do it? 

I think you can break it down quite simply into three areas: investment real estate, commercial real estate (which includes retail, industrial, office, and coworking), and residential, which is either student accommodation or multifamily, as it’s referred to in the States. The business setup is quite simple. The reason we offer so many products is that our core philosophy revolves around a single source of truth—data. For instance, everyone processes payable invoices, and Yardi provides a platform for that. This ensures that all data flows directly into your database, making data strategy and accuracy central to our approach. By offering a wide range of products, we can cover about 80% of what businesses need, allowing for system rationalisation. I was at a conference recently, and someone candidly mentioned they had 70 different systems in their business. I mean, how do you even begin to compile a report with that many systems? That’s an enormous task.

Tell us about Yardi’s newest product, coworking café entering the UK and Europe?

Coworking Cafe is quite new here in the UK. It’s currently in the early stages of a soft launch, which focuses on getting operators to claim their listings. As part of Yardi’s overall flex-based strategy, we’re not just providing some of the software but also other essential and ancillary services needed in the industry.

The industry has never had real-time inventory, and it has suffered because of that. Although it was never really large enough to justify it, Yardi sees this as an opportunity, and Coworking Cafe will be the first step in addressing that. It’s already operational in the U.S. and generates a significant number of inquiries. The good news is that, for now, it's free. So, if you haven't claimed your listing yet, do it now! Visit coworkingcafe.com—there you go, that’s the ad. 

Is Coworking café going after Rightmove’s market share, or maybe Instant’s new brand?

The fact is, we would welcome anyone doing anything because the industry needs consolidation. It needs online inventory and a more streamlined process. I don’t think we’re planning to bring Rent Cafe to the UK. Rightmove has its market share here, and I’m not sure that’s something we’ll pursue. However, there may be other markets in Europe where it makes sense. Ireland is one such market. Interestingly, Ireland has a Rightmove equivalent called Daft—yes, that’s really the name—and it dominates the market, with little to no competition at present. That market seems ripe for a new competitor. What IWG and Instant are doing with Worker, in my view, is to be applauded.

What are your thoughts on the newer proptech companies, are there any you are particularly impressed with?

I think there’s a lot of impressive work being done in the field. It’s crucial that there is new technology being produced all the time, and fresh ideas keep emerging—it holds the incumbents honest. These new companies are solving problems that haven’t been addressed yet, which is why I’m all for new proptech companies. For example, in residential, we partner with a proptech company called Home People. They excel at tenant referencing and help reduce the risk of problematic residents. We see them as ancillary, they play an important role in filling gaps, so integrating them makes sense.

At Yardi, we have a big partner program that integrates various businesses into our system. However, with so much out there, the real challenge for these companies is having a strong integration strategy. And that’s not just about having an API—I’ll probably get shot down by engineers, but often, touting an API is just a sales gimmick. There’s much more to a solid integration than that.

After working with so many flex spaces, are there any particular products that you are most impressed with?

I think Dan Drogman at Smart Spaces has done a great job. I think what he's achieved with that platform is brilliant, especially considering that tenant experience is often a challenge in commercial real estate because arguably, do tenants really need it? So, big shout-out to him.

You’ve been dealing with tech in flex for over 23 years now. Is there anyone else who can get close to your level of experience in the sector?

I mean, in flex, there are many old fogies around—people who have been in the game for a long time. Olly Olson, for example—I remember when he only had one or two centers back in the day. Zach from Orega is another one who’s been around for a while… sorry, Zach. I think this is a good thing, though, because it means people are in it for the long term, which is important as it gives them a deeper understanding of the sector.

What would you say has been a highlight of your career so far?

That’s quite a big question. I don’t think I have one particular highlight. This might be a bit of a cop-out answer, but I’ve loved every moment of it. I still have the energy to get out of bed in the morning and enjoy what I do. I love the constant learning, and I think the day that stops is the day you need to pack up. So yeah, it’s not really a great answer. I have lots of funny moments, but I couldn’t possibly repeat them…

What would you say is your quirkiest habit that your colleagues are well aware of?

I'm very noisy. Many years ago, when I started my first job after university, selling advertising space for Autocar and Motor magazine, they made you stand up to take a telephone call because it made you feel more powerful and in control of the conversation. They taught you to project your voice. I still do this today—I stand up, walk around, and pace. Of course, we embrace flexible working and hot desking at Fora Waterloo, so there’s no private executive office. So, if you’re really unlucky and end up sitting next to me, your day is going to be written off.

Where do you see yourself in 10 years?

Oh my gosh, I’ll be about 112 by then. My wife always says to me, “I hope you always work, because you’re a pain in the ass when you're at home.” So, as long as I keep enjoying what I’m doing and stay passionate about it, I’ll probably be doing something similar. I’d also like to get my golf handicap down to single figures...

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