RESAAS (TSX-V: RSS) CEO Tom Rossiter on How RESAAS Technology is Disrupting the Real Estate Industry

Gerardo Del Real: This is Gerardo Del Real with Small Cap Stock Digest. Joining me today is this CEO of RESAAS (TSX-V: RSS)(OTC: RSASF), Mr. Tom Rossiter. Tom, how are you this morning?

Tom Rossiter: Hi, Gerardo. I'm very well. Really, really well over here. Thanks for having me on the show. I'm excited to be with you and to tell you a little bit about what we're doing over here at RESAAS.

Gerardo Del Real: Well, thank you for taking the time. Initially when RESAAS launched, you billed yourself as a real estate social network and that definitely still applies, but you are so much more right now. You've had a lot of very exciting announcements recently. I want to get to those.

Before I do, however, I would love to have you give us a brief overview of the company and your background. And then let's talk about how busy you've been, because you've been busy checking milestones off one after another.

Tom Rossiter: Yeah, indeed, indeed. Well thanks. Great. Good starting point. So it's always interesting understanding how different industries operate in different countries. And for us and for me, when I moved from Europe to North America about 10 years ago, it was interesting to start to understand how real estate operates in North America. The idea of realtors was novel, that doesn't really exist in Europe. And the concept of an MLS, where you have agents on both sides of the transaction, on the buy side and the sell side. Again, that's kind of unique too. So as we took the time to understand how the real estate industry is structured in the U.S. and in Canada, it really became clear that there's an opportunity here to use technology to help agents, to help the brokerages and the organizations that they're with, to work better together. So that's how RESAAS was formed, as a result of this understanding and this "Aha!" moment of how the industry in North America, real estate industry is running.

Gerardo Del Real: And how long have you been involved with the company, Tom?

Tom Rossiter: Since its inception.

Gerardo Del Real: Perfect.

Tom Rossiter: We went public in 2011, that's about seven years ago. And the concept started just a little bit before that. It's been fascinating for us to come out of the gate and try and explain to people what it is we're trying to do, because it's such a unique, such a novel idea that RESAAS is. And so what we do, just to put it into plain English for people to understand, RESAAS connects the real estate industry through technology. So it's an online platform, it's purely for licensed real estate professionals. In RESAAS, they collaborate, they share opportunities, and they now start to transact with each other. It's this global single destination that we've managed to attract over 440,000 agents to use. And as well as that, we power a number of the leading real estate brands and organizations. And really what we help them do, Gerardo, is we help them elevate the number of transactions that their agents are closing.

Gerardo Del Real: So let me ask you this, Tom, I was a realtor once upon a time and I was involved in the real estate industry over 12 years ago. And one of the biggest challenges from the realtor's perspective is how fragmented information is in the industry. Tell me how RESAAS would help Gerardo the real estate agent back then, bring the fragmented information and put it together in one neat package or app per se.

Tom Rossiter: Yeah, completely. What we've noticed, and you'll notice if you're from the industry, despite agents locally being naturally competitive with each other, because they all try to win the same kind of listings. There's actually a tremendous amount of sharing, and a tremendous amount of cooperation and collaboration that happens at an industry level between agents and their brokers and their associates. In real life, in the brokerage offices and in the regular events and the meetups, agents share information. They share news of what's coming to the market soon or they look for help with other agents around, trying to find inventory that might not be on the market. So there's this inherent sharing mentality in the industry amongst agents.

What RESAAS does is it digitizes that. It takes that same philosophy, that same understanding that's been in the industry for years and years and years, and it just uses technology to make it more simple. As you know with technology, it gives you a much broader reach. It increases the size of your network, of your footprint that much bigger. It provides a way for agents to collaborate in an area strictly for agents and not consumers, no one else, so it's very business, very real estate focused. And when you do that, Gerardo, and you'll know this, when you put agents all in one place together and you let them start to talk at an industry level, where they can talk about the lingo and inventory and stuff that matters to them, then suddenly they're empowered. Suddenly they're better informed, and they can go forth, be involved in more transactions, and service their clients better.

Gerardo Del Real: So let's say that as an agent, I love your platform. How do you monetize what I love, from the business perspective and make that an opportunity for a shareholder of RESAAS? Because I know you recently launched the industry-first referral payment system. That's a big milestone for the company. Can you explain what that is and how you're monetizing all this data that I believe you own, right?

Tom Rossiter: You got it, yeah. Everything that flows through RESAAS is data that we own, and we're very careful with what we do with it because it's very precious data and it's trusted to us by the agents that add it. So let me answer your question in two parts. So your first question was about how does RESAAS monetize our company? And secondly it was about our new announcement, which is RESAAS Pay, which we're so excited about and I'll get to that in a sec.

Gerardo Del Real: It's a big deal.

Tom Rossiter: So from a revenue standpoint, there's really those three main channels, three main ways that RESAAS makes money. The first is an agent level and that's what we've built RESAAS for. We've built RESAAS for agents. The majority of agents that use our platform come in for free. And that's how we've grown it to be as big as it is. That's how we've got all this data, all this adoption, we've created that habit. We've made it a honeypot for the industry. Now, what's great is we get all this content, we get all this data, we actually monetize agents through a premium plan. Some agents choose to pay for an elevated subscription level that gives them a bunch of extra benefits, and they pay a fee every month to have that. So that's channel one, which is the agents.

The second channel, which is our bigger channel where we make revenue, is by licensing out what we've built to organizations within the real estate sector. That would be people like real estate brokerages or offices, the big real estate brands or franchises like the big box brand names, and also real estate regulators. So think of it as any organization, any company that has a membership of agents that wants to help them collaborate, help them share, help them do more deals amongst themselves. We privatize and white label RESAAS and then sell that to those entities, to the companies and those organizations and they pay us a monthly fee. I'll touch on that a little bit later.

The third main channel, and you mentioned it just now, is new and we are so excited about it. It's called RESAAS Pay. In many ways, this has been a few years in the making, but let me tell you this, no other company has managed to solve this problem. And what we've achieved with RESAAS Pay represents a huge step in streamlining how business is conducted between agents. So let me explain it this way, and as an agent, tell me what you think. For about four years or so, RESAAS has been known for helping agents facilitate referrals.

Gerardo Del Real: Right.

Tom Rossiter: And as you'll know, a typical referral is when an agent has a client wanting to purchase in a different location and they refer that business. They refer that client to another agent in that area. Right?

Gerardo Del Real: Correct.

Tom Rossiter: So RESAAS, in that case, we act as a matchmaker. We help that match occur. We help the agents find each other, we help them facilitate what that agreement looks like. And we track tons of data. But at the end of the day the process goes offline. And this means that at the end of the transaction, when one agent is paying the other agent their referral fee, it's typically done by check. Which means that it's slow, it can turn up late, and in some cases it doesn't appear at all. Now this all changes with RESAAS Pay. It enables agents to close the entire referral transaction right from with inside RESAAS. And we make it really, really easy for one agent to pay another agent. And they can do so using their credit card, so they earn air miles or points, which is obviously great. And the funds get deposited into the other agent's, or the other agent's broker’s account, the next day. So it's simple, it's secure, it's fast, and it's traceable.

And just to wrap the story back to one of your questions, from a shareholder standpoint and an investor standpoint, then you need to know this, RESAAS charges a transaction fee to facilitate this service. All of the agents that we've polled and we profiled and we've chatted to have told us that they are more than happy to pay for a service that provides added peace of mind and added security for referral payments. RESAAS Pay is going to charge just 5.5% of the transaction fee, and it takes care of all of the processing, all of the tracking, all of the security along the way. So that's what we've announced recently. That's the game changer that we're really excited about, and it further accelerates our vision, Gerardo, to be the de facto real estate platform for agents and brokers and major brands worldwide.

Gerardo Del Real: So let me ask you this, Tom. How do you scale that out? Can you share with me some of your clients that obviously are going to help scale this out, not just domestically. You mentioned earlier the difference between the domestic and the global market, I want to talk about that opportunity in just a second, but some names that I may be familiar with?

Tom Rossiter: Totally. If I tell you that really RESAAS essentially provides an online version of what large real estate brands have been doing for years physically, then it won't surprise you to hear that a number of the biggest real estate companies globally have opted to run RESAAS technology. They do so really to increase deal flow. So really what we do, the way to think about it is, we just digitize their existing business, the kind of businesses they've been running for years or decades in some cases. Because we use technology, it gives them a much greater reach, which gives them tremendous visibility into new opportunities that they would probably otherwise miss out on, or perhaps not be aware of. And ultimately it provides them and their agents with more transactions.

We work with a number of brands, a number of brokerages. You asked about one that you would have heard of, so most notably, we work with RE/MAX, LLC, the corporate franchise, and they've got around 120,000 agents globally. They're in over 100 countries and we work with them. We power their global referral exchange. And also another company you've probably heard of, especially being down from Texas, is Keller Williams, which now I think have close to 180,000 agents worldwide. And between those two they're the top two real estate brands globally in size. And they both run on RESAAS technology.

Gerardo Del Real: Wow, that's fascinating. Now I mentioned the recent announcement. You also have been making changes to the board and bringing in some pretty notable names. Can we talk about the team in place?

Tom Rossiter: Sure. I think most recently, I think the news we popped out last week it was, is announcing our new Chairman. This gentleman's name is Pierre Chadi. He is a seasoned software technology sales person. And interestingly, he became aware of RESAAS as an investor many years ago. On one of his trips to Vancouver, which is where we're based, he said, "Oh, can I pop by and learn more about what you're doing?" So he came by and we showed him what we're up to and he was really impressed. So much so that he wanted to join our advisory board and give us some guidance and advice, obviously, on how we can scale the sales efforts, how we can grow the technology we're using. And he did that around five years ago, so he's been with us for a number of years now. About 18 months ago he joined our board of directors.

So he's had great insight into the inner workings of our business for a year and a half. And now is the time, as we really gear up to accelerate sales to a new level across the U.S., that he comes into the role of Chairman providing obviously that oversight from a board standpoint and representing shareholder interest, which is obviously paramount. But internally I'm thrilled now that he's involved with us at this level, where he can provide that guidance, that discipline, those strategies and tactics on how to really efficiently scale the business throughout North America.

Gerardo Del Real: You mentioned early on in this interview, Tom, the difference between the global and domestic market. Now is the platform just in English? Is it in multiple languages? Does it support just the U.S. Dollar or how does that work? Explain that to me.

Tom Rossiter: Certainly. Our focus is really the U.S. market, which we've taken the time to fully understand and we've identified the American organized real estate market as our biggest opportunity. Just because real estate is a global industry, we have gone international, we do have agents overseas using RESAAS regularly. We did take the time and the effort to translate what we've built into 22 different languages, so it's easily used overseas. We support multiple currencies and multiple units, so not just square feet but square meters too, for our European friends. But the majority of our focus at the moment is on the U.S. And what we've been working to achieve since our launch is specifically working at a U.S. level with organizations to streamline what's going on in America.

The American real estate system is not efficient. It's very fragmented. There's too many pieces to the puzzle, they don't line up. And the more that we've got to understand how it works, the more opportunities that we see. So I'll give you an example. We work with a number of real estate regulators, so they are the real estate boards or the associations that govern each of the markets across America. What we've found is they often didn't have very good insight into what was really happening in their market. There were transactions happening outside of the system that they provide and there was an issue with visibility and data accuracy.

Gerardo Del Real: Right.

Tom Rossiter: So what we do, one of our primary focuses in the U.S., is to work with these regulators and these boards and these real estate associations to provide them with unparalleled visibility into what really happened in their market. So said another way, Gerardo, RESAAS is the only platform in real estate that gathers and organizes off-market real estate listings as well as on-market, with the blessing of the local regulators and the state associations and under the umbrella, under the rules and in accordance with how the National Association of Realtors likes to operate their code of ethics amongst all realtors.

Gerardo Del Real: Fascinating, fascinating, fascinating. Let me ask you about what you have in store, what the plan is here for the next several quarters. Obviously you've been busy, you've had a successful year. But there's a lot of work left, I imagine. What do we have to look forward to, Tom?

Tom Rossiter: Well, I'll tell you what, Gerardo, building a platform is no small undertaking.

Gerardo Del Real: No, it's not.

Tom Rossiter: And remember that along with the travel industry, real estate is the biggest sector in North America. Right?

Gerardo Del Real: Correct.

Tom Rossiter: So to create a platform that enables the industry to disrupt themselves, to create an ecosystem where competing brands all play and cooperate and share deals. People said that this would never work, and it has. Our vision is a long-term view, and our view and our goal and our vision is to allow every licensed agent, every broker, every realtor, to communicate and to transact in a single technology platform. And we've been fastidiously executing our business plan exactly as we defined it years ago. And we're continuing to see really strong growth across all of our different sales channels.

Gerardo Del Real: Excellent. Tom, what does the share structure look like?

Tom Rossiter: Well, we're publicly traded. We're listed on the TSX Venture Exchange under the ticker RSS. And our company's really tightly held. We have tremendous shareholders that really understand the magnitude of what we're accomplishing here. Share structure wise, we have only 53 million shares outstanding, the majority of which have been raised at higher prices. And our market cap today is only $12 million dollars U.S.

Gerardo Del Real: Wow. And you're generating revenue as we speak, correct?

Tom Rossiter: Correct, yeah. We spent a long time, early on, running RESAAS with almost no revenue streams, again as I said earlier, to get people using it. To get them familiar with this concept of letting agents start to share and collaborate online. And we raised capital early on to allow us that runway to build that out. And once we did that and once we became known as, as I said earlier, the honeypot for the industry, and we earned the trust of the agents and the brands, now we're starting to monetize it. And last year was our first year of real revenue generation. So from a cold start we did really well. Our business model is really all about recurring revenue, aside from the transaction piece, which is new. So we've got really good insight into how it's going. So now we've got very strong numbers. Our growth levels are fantastic, we're continuing to bring in new opportunities and fill the pipeline. And so the outlook through the end of the year and into 2019 is the strongest it's ever been.

Gerardo Del Real: Wow. Well, I have to say, we like to be early here at Small Cap Stock Digest to stories with compelling risk-reward propositions. This is as compelling as I've seen in quite a bit, Tom. I'm looking forward to further updates and hopefully having you back on to share those updates as you scale this out. It's disruptive. It should be fun.

Tom Rossiter: Yeah, absolutely love to. There's a lot going on and there'll be lots more news coming, so happy to come back on and share it with you and your viewers and listeners.

Gerardo Del Real: Tom, thank you so much for your time. You have a great weekend.

Tom Rossiter: You too. Thanks.