Jason Freedman, co-founder of the new YC-backed startup 42Floors launching today, says he got the idea for the startup because “searching for office space just really, really sucked.” The reason the process was so miserable, he says, is because he was powerless. To find commercial real estate, he had to go through brokers who all insisted they had access to proprietary data. But when each broker returned a list of search results to him, it was the exact same list, in the exact same order, from the same database of listings.
Thinking that it was time to provide an alternative, Freedman decided to found 42Floors, a service that will allow people to search for commercial real estate online. The company is starting by hosting office space listings located in the Bay Area at launch, and will then expand into other markets.
Taking advice from Paul Graham, Freedom decided he wasn’t just going to build a web product, but actually learn the industry first. He got his broker’s license, shadowed a broker in town, and learned, over the course of six months, that listing agents are actually eager to find better ways to market their spaces.
“They don’t have a direct marketing channel,” he explains. “So I chose not to go to war with the brokers, but to work cooperatively with them. And they’re willing to give us their listings because they want to market better than they are currently,” he says.
On 42Floors, the agents can list their properties for free, and the startup provides an additional service for them, also at no cost: they take photos of the property up for rent or sale. Typically, brokers’ listings only include shots of the outside of the building, but 42Floors will shoot inside – something that matters more when companies are looking to find new office space. The company will also handle the scheduling arrangements when a potential client requests a tour of an office space, and in a few months, it will launch a mobile app version of the service that will allow all parties to stay better connected while on the go.
For now, 42Floors is primarily targeting tech entrepreneurs in need of office space, and it comes at the problem with a deep understanding of how startup founders think about finding this type of listing.
“People want to be browse, they want to be inspired.” says Freedman. “Even if it’s only 1,000 square feet – that’s a tech entrepreneur who raised a seed round and wants five desks; that’s a CEO who’s building his new castle.”
“People search for their dream offices, they don’t search for ‘commercial real estate,'” he adds.
On the site, the listings can be filtered by type (e.g., lease, co-working, shared), size, price and (soon) region. At launch, the focus is on the Bay Area, but the plan is to roll out the service to other startup markets in the coming months, including New York, Cambridge, Boston, Seattle, and wherever else there’s a tech center where startups need office space.
42Floors will be focused on this vertical for most of the first year, before expanding into other types of commercial real estate listings.
The reason for the focus on office space, Freedman explains, has to do with an unfilled need. Brokers make the most of their money from doing one big deal per year, not lots of small deals, so their focus is always on closing their high-priced listings. Meanwhile, 80% of commercial real estate transactions are under 5,000 square feet – spaces like those that startups would want to move into. These listings are currently ignored by the industry.
In addition to Freedman, 42Floors’ team (listed here) includes James Bracy, Jon Bracy, Ben Ehmke, and David Woodworth.
42Floors has raised seed funding from Y Combinator, StartFund, and Ron Conway (through SV Angel), who put in an additional investment. It also has ten commercial real estate veterans who participated as angel investors in an advisory round. The company has raised $400,000 in total, all sources combined.
And, in case you’re curious, the reason why the company is called 42Floors? Because 42 is the answer to everything, of course.