“It’s all about speed and engagement” - Wouter Merkestein - Founder Series #4

Wouter Merkestein is Co-Founder & CEO at laiout.

Wouter met his co-founder in a covid quarantine hotel. After two years of intensive R&D and product development, Laiout is now tackling the long-standing bottleneck in the early-stage design phase: delivering high quality floor plans within mere seconds. Having successfully completed projects in 28 countries, laiout is now bringing its technology to the masses across the globe. It was a pleasure to interview Wouter during this accelerated growth phase.

Tune into this session to hear about the benefits of speed, how to maximise returns of existing assets in a period of economic turmoil, future office trends, and how laiout will be scaling its product vertically across real estate asset classes.

Interviews with inspiring Founders, Investors, and Real Estate Executives will be shared weekly on this podcast series - follow the PropTech Talks interview series and stay tuned!

Connect with me on LinkedIn: https://www.linkedin.com/in/matthew-maltzoff/

Transcript

00:00:04 Matthew Maltzoff
 Hey everyone, welcome to the next edition of PropTech Talks where we talk with successful PropTech founders, investors and real estate executives. About their journeys to where they are today, the nuances of the modern real estate industry and how to capitalise on them. We're here with Wouter Merkestein, the Co founder and CEO of laiout. Wouter, thanks for coming on.
 
 00:00:24 Wouter
 Love it, thanks a lot Matthew for for having me. Very exciting today.
 
 00:00:28 Matthew Maltzoff
 Cool. To start it off, we'd like to hear about how you started off and who you are and your journey so far and how you got to eventually founding laiout. So would you like to tell us a little bit about all of that?
 
 00:00:41 Wouter
 For sure. Yeah, it's, it's quite, a, quite a funny story actually. I met my Co founder Christiano roughly 2 1/2 three years ago in a COVID quarantine hotel. And we were allowed to go for on the on the walk for about one hour a day. We promised to come back. And this is where we kind of started sparring ideas. And my Co founder Christiano, he's an he's an architect, comes from a long family line of architects. And he told me about how this design phase that we're now active in as laiout, which is automated floor planning, it's one full of frustration from every party involved. And that kind of got me thinking and got us both thinking and that led to what is now laiout.
 
 00:01:15 Matthew Maltzoff
 So from that point, what did it look like to actually launch and create the automated floorplan? Were there other competitors already? Was it a bit of a jump to get into it? What was that journey like?
 
 00:01:29 Wouter
 So at the time especially, but, but nowadays even more, there was quite a bit of hype around generative AI in the in architectural space with the likes of Spacemaker coming out of Oslo, where we were located at the time especially. And what they did very well was like, Hey, you have a plot of lands and how big can you build a building on it and, and how tall can you build? And what is the influence of the building on the surroundings and the surroundings on the building? And by now there's at least fifty other companies that do the same. So that's, that is kind of like the powder shell. But what we realised is that nobody is really tackling one of the problems that's a bit closer to our hearts, and that's the existing buildings that are already there. Because existing buildings, as many say, very often are the most sustainable buildings compared to replacing them for new buildings. But technology was very much addressing just how to build new buildings. And we were thinking like, why won't we help to find ways to reuse what is already there? And that's why we chose for the niche that we're in. It's like, OK, you have a building and especially with commercial spaces, you have a tenant just moving out, but how can you then figure out how to reassign the space to a new tenant that's coming in and using the latest technologies for that? So that's really use case that back in the day was was really not addressed. But even today there's a lot of smoke and mirrors with others claiming that maybe do something similar. But you really see that the complexity of of handling existing buildings, think a window elements, corridors, emergency exits, pillar placement, etcetera. That's really not something that's easily optimised upon. So that's what's triggered us to focus on that sustainability angle and complexity and lack of competition.

00:03:01 Matthew Maltzoff
Very cool. So before we actually jump into sort of the actual problems that are being solved, and I'd also like to touch a little bit about your experience building this, before all of that, You've had quite an interesting road to get you to that meeting with Christiano. Can you tell me a bit about that? How did it all really stop you?

00:03:22 Wouter
Yeah. I mean, I guess ever since I was young, I've been quite international. My mindset and being whether that's travelling, studying or working abroad. And my last paid employer before employing myself as as CEO was one of the largest ride hailing companies in the world called Ola. And back in the days, I was mainly responsible for launching their services across Europe, but mostly in the UK. And that really led me to kind of, yeah, introduce me to this tech scene where you have a software and try to scale it across borders very rapidly and to try and take market share very rapidly. And that fueled my entrepreneurial aspirations to do something similar, but then in a different industry in the end, which is it's real estate. But yeah, that got me to think about starting my own business at least. Yeah.

00:04:06 Matthew Maltzoff
And so I guess the, the excitement seeing what was possible over at Ola then started to ignite the entrepreneurial flame. I, I see you've also been at Antler. For those who don't know, tell us a bit about Antler and what was happening there.

00:04:22 Wouter
Yeah. So Antler really focused on profiles such as myself that have a relevant work experience, entrepreneurial aspirations, but maybe not necessarily the right Co founder or idea. And so they set up programmes in, yeah, more than 20 countries at the moment already. And basically what they do is they bring together Co founders with or without ideas and, and put them together through an intensive programme to then, yeah, see if if there's any magic that happens, meaning Co founders finding each other, coming to good ideas that are worth pursuing and, and in the end actually, and Antler can also invest at the end of the programme in these start-ups. So we kind of start off from day one with the global investor backing you. And this is where Christiano and I also fuelled our our entrepreneurial aspirations even more after finding each other in the quarantine hotel.

00:05:07 Matthew Maltzoff
And stuff. So on to the actual problem within the industry. Correct me if I'm wrong, but my understanding is that traditionally this process of filling up an architectural floor plan was pretty slow, pretty painful. The slowness of it would potentially even kill deals. And also there was not really good information, not good data on the floor. So this is a bit of a direct question to you. How does the philosophy of speed and getting things done quickly? I've worked with you in the past. I know you get things done really fast. How does the philosophy of speed and getting things done quickly? How has that influenced a the impact you're delivering to your clients, but also the ability to grow your business?

00:05:49 Wouter
Yeah. Well, I mean, think about anyone who's ever been involved in sales either in a receiving end or on the one trying to get the sale across. You want to hook that person while you have them. And it's one of the biggest things that kill sales is a long sale cycle. And when it comes to floor plan design specifically, it comes very early on in the, in the sale cycle when it comes to real estate. So imagine yourself, you're the tenant and you have a growing company needs, and I don't know, you need 100 people and you want to see how you can fit them in a certain space. Well, normally you would come to me, for example, as a real estate owner and I would tell you, I would write down your preferences and say like, OK, you know what, I'm going to find you someone who will draw your floor plans. If you're lucky, you'll get it within one or two weeks. But otherwise it might be several weeks, right. And in that time you might go shopping around. And it's been a bit of a, yeah, maybe a less interactive conversation overall. Maybe you saw some stock photos, etcetera. But there's this loss of attention span and, and, and that's kind of exactly where we tried to situate ourself in like being able to generate personalised floor plans within a few seconds because we would basically do the same thing. You tell me what you want, but then I fill it in right away in the software and I click on generate and between 3 and 10 seconds later, you start seeing your personalised floor plan options on the screen. And then you can start thinking, hey, this one, I like that one I don't like, can we just change this a bit? Can we change that a bit? And then once you walk out of that first meeting, then you kind of already know how you could populate that space and you could know how your where a team would fit, where your main, your own personal offices. And that really shortens that sale cycle a lot. And because of that, especially nowadays with all the economic turmoil and turmoil in commercial real estate, it really helps you to lease our buildings quicker and that's really where the value is in speeds.

00:07:27 Matthew Maltzoff
Beautiful, beautiful. Really well answered. So when it comes to actually laiout as a business, the technology is obviously really cool. How long did it take from that sort of that meeting to actually generating revenue and doing sales? Were you able to do it without a product or did you need a product at first? I asked this because many entrepreneurs sort of have some connections and can start doing deals beforehand. What did it look like for you?

00:07:53 Wouter
Yeah. And honestly, like this is also something that they'll try and teach you at Antler. But like there's so many companies that get the first revenue just on Excel and then claim it's some sort of technology, but it's actually someone doing it, the manual work behind it. But the problem is that our tool again, has to be instant. So we have very little opportunity to do some, some window dressing there and, and really fake it because we wanted people to have the software on their system and to be generating it without our, our, our interference, right. So that with that in mind, we really had to go a full on like tech approach with a lot of researchers, scientists both internally and externally working for this to try and, and build an algorithm that automates the thinking of an architect that includes regulations and architecture practise, etcetera. So that took a long time to answer your question, it took roughly 2 years of hardcore development before we were fully confident, like, hey, this is now good enough to put in a live environment. Yeah, that's, that's just the nature of the type of problem that we're trying to ultimate, which is at the surface very easy to understand. But if you go deeper, then it's a lot more complex than one might think. But now we're incredibly happy with the results. And I do think that that's also explains a more technical and because of that commercial mode that you can build out because it's simply not easy. And to my knowledge, nobody has really been able to do it to a similar extent as we have.

00:09:14 Matthew Maltzoff
Fantastic. So more towards the actual industry today, obviously it's a very different time to what many real estate players are used to. Interest rates the first time in a while are high. It's no longer a game of just making any investment decision. Before it was always a good decision. Real estate eventually will sort of go up in value. Whatever you put down on the real estate, the yield will be probably higher than the 0.5% interest rate. So whatever, it's always a good decision. Now it's pretty tough for investors. At the same time, some new curve balls now they need to be smarter about how energy efficient the building is, how these sort of building might help them towards net zero goals. There's increased requirements on data, you know, with regulations like SFDR, it's a completely different playing field. And while that on the one hand means that there are some companies that can really get ahead and capitalise on it. At the other hand, some companies might feel that they're, you know, they're falling behind and they don't really know what's going on. What do you make of all of that? And how does How can laiout help if I can sort of shamelessly ask you?

00:10:21 Wouter
I mean, we're in the commercial real estate space and what we see there is kind of like a, a split almost in types of profiles within the industry. So it's, it's kind of tough for, for almost everyone depending on the geography, but especially in the more western geography. So it's almost tough for everyone and assume that's the case. Then you have kind of like 2 profiles. On the one hand, you have people that go in defensive modes like cost guarding, don't do anything crazy. Let's just sit the storm out and then see what's what's left of it and then start building again. But what I see and what I'm of course looking for as an entrepreneur and as a CEO as well, it's like I'm looking for those profiles that are like, hey, it's really tough right now. This is the time to double down on technology, to double down on savings to make sure that we're in a healthy position and, and, and advantage positions for, for when things are starting to get better. And, and now we're starting to see signs again where maybe the real estate industry is, is going to grow again and it's going to get better again. And then those individuals will benefit the most from these technologies such as ours. So, so that is kind of like one thing that we notice, another thing that we're really benefiting from is that there's not so many new developments anymore. So, but what happens is that the existing developments are of course, the ones that are already made. There are still there and there's still money to be made, especially with increasing competitions and we see an increased focus on these existing assets. And how do you, again, coming back to the point from myself earlier, if you look at software and especially in the architectural design space, there's not many softwares that will help you handle existing buildings. So this is really where we have kind of like an advantage over all these other solutions that help you build new buildings. So we've actually seen an increase of interest because of that of like, hey, I have these spaces, how can I deal with tenancy turn around the quicker and more efficiently. So it's, it's really been more beneficial for us to be honest than than anything.

00:12:06 Matthew Maltzoff
Year, really interesting and you know, one point we've had come up quite a few times, 80% of the buildings that will be standing in 2050, they're already here have already been built. So you know, people thinking about those new buildings, turning them efficient, that's actually going to have a small impact in terms of the net outcome will be, you know, by 2050. So no really, really interesting about that. In terms of the the future for you, what's next for laiout? I'm going to ask you about yourself as well, but in terms of laiout, what's the next entrepreneurial checkpoints for you?

00:12:40 Wouter
Yeah, bit in line with what you just mentioned as well, really leveraging that, that most of the the buildings already there, but not just the buildings, but but also the increased desire to reuse everything within that building if possible. So meaning in in many countries whenever you would switch between tenants, you would strip everything out in the Netherlands, even the flooring. I don't know why, but but we're kind of moving away from that. So also as a solution, we're not necessarily focusing primarily anymore on these cat a kind of like empty spaces and generating on that. But our algorithm is now being tweaked to accommodate for like, hey, let's upload the tenant that is now leaving, their floor plan, put in the request for the new prospects and a mix and match and see how much of the previous tenant’s floor plan can be reused. Let's say you ask for a certain closed office of a certain amount of square metres or square foot, then we'll kind of scan the previous tenant’s floor plan to see if there's already something similar to that. Maybe it's a meeting room, but then maybe it can leave some of the petition walls, etcetera. So you can kind of get into the circularity of things. So, so I think that's a really close milestone that we're focusing on right now. But additionally, we've got an incredible amount actually of interest out of different verticals seeing what we're doing now for offices. So one of them is, is, hey, can we do the laiout for hotels and we do laiout for data centres and warehouses. And one that is very relevant at the moment is that we have several developers in conversation with us related to laiout for office to residential conversions, old office buildings being converted into apartments. And again, because we have this like unique ability to generate within existing spaces, taking into account regulations and stuff, we could also play a very big role there. So we're also considering spreading a bit more vertically across different types of floor plans.

00:14:22 Matthew Maltzoff
Fascinating. And the conversion from office space to residential, is that something you see increasing over the next few years? What do you think is actually going to happen to the office?

00:14:35 Wouter
I mean, it's definitely, it feels a bit like there's a massive check going all across the industry of like, Hey, can we convert any of our buildings and, and everyone is, is doing those checks manually. So I think there's a great opportunity for companies like ourselves. But how long this will be like it's, it's, it's hard to say. I think very much depends on the geographies and it's very much, maybe even the most depends on the government incentives. And that doesn't just mean financial incentives such as in Germany and even in the US to have some, but it also means how flexible the government is willing to be on the regulations because very often these buildings are not necessarily fit for purpose. And me, for example, I wouldn't mind so much if I have a little bit less daylight or whatever. So I as an end buyer, I wouldn't mind. But the regulations just don't allow for several of these buildings to be converted into apartments because of, for example, daylights, etcetera. So there's really need a need to be a bit more lenient there for it to really work. And if that's the case, then I definitely think it's a growing industry.

00:15:32 Matthew Maltzoff
So one one other variable in this equation is the fact that lease lengths are getting much, much shorter. And before, you know, if somebody takes an office sort of a big headquarters, that's just sort of their’s, it's that's sort of there to stay. And that's, that's really it. Now companies are changing in size so rapidly. And then that also comes down to the fact that just the work culture in the West is very different. People will hop from jobs more frequently. It's it's easier than ever to look for new jobs. You don't have to literally run the streets throwing CVs around. You know that's on your way home. People are just looking on LinkedIn at other jobs. So do you think that's going to have an impact on the requirement for increased usage of laiout, but also increased office swaps? What are your thoughts on that?

00:16:19 Wouter
Yeah. In general, it's something we feel like we're still benefiting from that, although there's some that claim that the trend leads to less office usage, meaning less markets for us to pursue, right. But it is rightfully so, I should say that average tenancy. Has been dropping. But to be honest, it's been dropping for a very long time. From the data that we see, we do see an increase post COVID, but it's it's kind of just accelerated. So what will that mean to the office space is very hard to know exactly. But again, I do think there's a big difference between certain geographies. There's certain countries where the going back to office is, is really quite present, such As for example, Norway, where we're located, people tend to go back to office quite a lot. But there's other countries where it's really a lot less. Personally, I believe very strongly in a company culture such as Atlassian has, where there's offices there if you need them, but you don't have to come in. And that will of course mean that those offices will be a bit different. There will be more focus on collaboration, less so on every own personal workspace. So you really only come to the office if you need to work and talk with other people. And otherwise you might as well just work from home. And I definitely think that that's a trend that I expect to see more often, especially also for tech companies such as ourselves.

00:17:29 Matthew Maltzoff
OK, very cool. In terms of the next few years for laiout, we know we've had a lot of exciting things from you guys. I think you were even coined the most promising PropTech startup out of Norway. I don't want to miss a quote, but I have read that somewhere. What does that actually mean in terms of what you guys are going to be doing? Are you going to be launching potentially new products that can be stacked on the back of this? Are you going to be now selling it every, everywhere? You're going to increase your marketing? Are you going to grow your team? What's really the next steps for you?

00:18:01 Wouter
Yeah. As I mentioned, we spent, yeah, roughly two years on pure like R&D, just building the algorithm and making sure that the algorithm is able to kind of deliver results similar to what an architect would be able to do. And now that we're there really in this like scaling phase. So we've throughout the past while we've been able to do projects in, at the moment, I think 28 different countries across the globe. So it's really a scaling kind of period for us because we're getting recognition for both the problem and the way that we're solving it from all across. So I think there's plenty of opportunity there in terms of product. Definitely some new technologies will integrate, but I think most of the efforts will be about bringing laiout to the masses across the globe and that's where at least my primary focus will be going forward.

00:18:41 Matthew Maltzoff
Interesting. And when when it comes to the new products component, do you or I guess putting work there, is it to increase how good the current offering you have is? Or do you think in terms of keeping the product offering you have right now and adding something that you can upsell to current clients? What how, how are you playing that one?

00:19:02 Wouter
Yeah. So I kind of see our our generative algorithm as as our technical mode. So very hard to do. Very it took a long time to do and and still haven't found any alternatives in the market. So that's kind of like a foot in the door. And what we're going to be doing now is we're going to add a lot more like modules to that. So one of the things that we, we most recently posted is like the, the one that's that's very typical in the industry and, and, and, and lot simpler to be honest, to do than than the first part, but adds a lot of value, which is using rendered imaging or rendered video walkthroughs and such. Even though it's not as as difficult as, as the first part of like being able to work the, the endless list of constraints when, when making a floor plan, it adds a lot of value for that tenant. Again, for like the prospect of being able to kind of envision how a space would look like. And, and this type of technology is very well studied, very well exercised already. There's many different ways in which you can do it. So this is just one of the the different functionalities that we'll be adding to again that the very solid core that we've been building.

00:20:00 Matthew Maltzoff
That that's going to be really cool. I hope we can see that before September. That would be really, really cool.

00:20:05 Wouter
Yeah, yeah, we'll be sure too to have it ready by then. I'm pretty confident we can. So, so then the workflow is really like, hey, you fill in your preferences, you click on generate, you get your 2D plan, it's right on 2D plan, click on 3D, roughly wait four or five seconds of your 3D model and click boom, render. And then within the same conversation, you'd probably have your rendered images as well. Again, it's all about speed and engagement.

 00:20:26 Matthew Maltzoff
 That is so exciting. In terms of your tips for other potential entrepreneurs out there who are interested in listening to what you're doing, what would your advice be starting a company now and scaling it like you are?
 
 00:20:39 Wouter
 I mean, definitely something I've learned throughout my journey is trying to find at least a problem that is personally felt by either yourself or by whoever you're doing the journey with, right? So my case was Christiano and very clearly could explain like, hey, architects don't particularly enjoy this space. The tenants feel like they have to do like 10 different meetings just to get to the floor plan. So they're not enjoying it and they're getting less interested. The owners are not interested. So kind of find a problem where ideally nobody is really to spend time in, and then ideally also find one that you can automate. I'm always one big believer of technology more so than a service. So that's also something we try for as a company, really want something to be hands off scalable. So think about optimization problems where humans just lack maybe the time and capabilities to compete with advanced algorithms. And that's, for me at least, a recipe for success. Yeah.
 
 00:21:31 Matthew Maltzoff
 Amazing stuff. Last words from me, I would love to give a huge shout out to Wouter for doing this podcast. Wouter has, and I hope he doesn't mind me saying this, He's received a lot of praise from few of the attendees at PropTech Connect in 2023. And one of the attendees, I'm not going to mention who reached out to me or was speaking with me personally and he was saying the thing that's great about what laiout are doing is that they've very clearly understood sort of the pain or the pain point of who they're speaking with. So you know that the sort of quote that came out of that is don't sell the feature, just sell the “So what” I think even a lot of the times, even from myself as a founder, I can go to an entrepreneur like you and say our conference has XYZ, la, la, la doesn't matter. Really the only thing that's going to matter to somebody like Wouter is this is going to be the the conference that allows you to partner and get deals. That's it. For Wouter, of course, this is the solution that will remove that pain and helps actually helps them get deals as well and helps them with what they're doing. So, you know, really interesting to sort of pick at your brain Wouter and and chat with you on this one.
 
00:22:39 Wouter
Thank you, Matthew. And, and, and I'm really pleased to hear as well about the compliments that I've gotten and I'd love to find out who it is to, to follow up on those if I haven't already. So thanks a lot, Matthew.
 
00:22:49 Matthew Maltzoff
Awesome stuff. That's it. Thanks for everyone who's listening and I'll see you on the next one.