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Q & A with Accruent CEO Mark Friedman

Non-real estate companies have a tendency to sweat the details of a lease or property purchase only to ignore the operating and competitive advantages they should be leveraging from their assets.

Enter fast-growing Santa Monica-based Accruent, Inc., which creates and markets real estate solutions to that problem. Since its 1995 founding, Accruent’s products have been adopted by over 350 retail and corporate customers, including 40% of the country’s top 100 retailers and 20% of Fortune 500 firms. High-profile customers include Circuit City, RadioShack, Staples, Boeing, Bristol-Myers Squibb and Viacom.

Accruent’s triple-digit revenue growth helped earn the company an annual slot on Deloitte & Touche's “Technology Fast 50” list from 2001 through 2006. The company is headed by 40-year-old CEO Mark Friedman.

NREI: Tell us about your company’s mission.

FRIEDMAN: Our goal is to align the business strategy of companies with their real estate strategies. We call this real estate performance management. We help large companies invest in, acquire and manage their real estate portfolios as occupants.

NREI: How do your products benefit your customers?

FRIEDMAN: Real estate is generally a company’s second or third largest cost. And we help them maximize the impact that their real estate has, whether it’s a retail location, restaurant, branch or corporate office, by helping them drive such things as revenue growth, cost reductions and financial compliance.

NREI: What are some specific programs?

FRIEDMAN: We have what we call our expense-reduction solution, where a company simply enforces financial terms they’ve already negotiated. Typically, companies can save 5% of their occupancy expenses just doing that. Then there’s revenue-enhancement: the faster that locations are acquired and opened, the sooner they start generating revenue. We also have a financial-compliance solution that covers [real estate-related] governance and governance compliance. About 10% of small public companies have had to restate their financials and half of those restatements have come from lease-accounting problems. As we’ve seen, if a company has to restate financials, it creates a picture of financial incompetence.

NREI: What led you to create this type of business?

FRIEDMAN: I was a technology guy who had gotten into commercial real estate with Cushman Realty [now Cushman & Wakefield] in 1990 as a corporate tenant rep, when I saw the first spark for this business. Big companies were paying their brokers and lawyers and advisors to negotiate these really great lease terms. But as soon as they signed the deal, the real estate would basically disappear off the radar screen. They weren’t equipped to deal with the financial structure and they’d end up not taking advantage of the deals they negotiated.

NREI: When did the concept really take off?

FRIEDMAN: The vision has been around for a while but the products weren’t there to deliver that vision and the customers weren’t ready to embrace it. But we saw a big shift in 2006 when the solutions finally caught up with that vision. It was an exciting inflection point. Customers were really getting behind this and embracing everything we’ve been talking about for the last 12 years. A lot of those companies now have a foundation and are ready to take it to the next level.

NREI: What’s next for Accruent?

FRIEDMAN: We’re forging partnerships with CoStar Group, Pitney Bowes-MapInfo and Microsoft, among others. Our CoStar partnership will provide on-demand access to their data through Accruent's software [for an additional fee]. This allows retailers to automate site-selection data that they previously had to enter manually. It’s really a case of one plus one equals three. For example, if you’ve got co-tenancy clauses, you need to know who the other tenants are in all the malls and you need to know the formula to get this data. There’s a similar marriage with MapInfo, only with demographic data and predictive analytics. For example, it provides a greater understanding of how to take a store location and compare it with a location across the street or around the block. With Microsoft, we’re thinking about future Web-based applications and important user interfaces that will be built into some of their new technology.

TAGS: Technology
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