Why AI Won't Replace Great Real Estate Professionals

TRANSCRIPT SUMMARY:

00:00 Why Technology Determines Who Gets Ahead

01:40 Building Success Through Real Estate Cycles

04:49 Run With Technology or Get Run Over

07:55 From Fax Machines to Artificial Intelligence

10:48 Why Real Estate Resists Technological Change

14:10 Controlling the Customer Journey

17:30 Building for Tomorrow’s Invisible Problems

21:35 Why Solving Today’s Problem Is Not Enough

25:21 The Consumer Is the Heartbeat of Business

29:59 Learning From Other Companies’ Mistakes

39:35 How Chloe AI Qualifies Real Estate Customers

53:25 Building Market Share in Trillion-Dollar Industries

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FULL TRANSCRIPT:

Sheldon Wolf (00:00)

You either run with technology or get run over by the technology. If you're building a company to fix today's problem, the consumer is the heartbeat of anything you're doing. You're not gonna deposit your realtors in the bank. You need more transactions. If I do not have the customer, there's no trips to the bank.

Jeff Holman (00:19)

Welcome back everybody to the Breakout CEO podcast. I'm your host, Jeff Holman, with Intellectual Strategies, a law firm that works with a bunch of successful CEOs and we can't share their stories because they're confidential. So when we bring on guests like Sheldon Wolf, who's here with me today. Sheldon, welcome to the show.

Sheldon Wolf (00:36)

Thank you. Thanks for having me, Jeff.

Jeff Holman (00:37)

Yeah, really glad to have you. I love love talking with people like you who have can kind of open the curtain, so to speak, right? Show what's happening behind the scenes in businesses as they're growing, as they're being founded, as they're scaling. Like at each stage, they there's they each have their own chaos, right? And we've talked a little bit about chaos already, prior to prior to hit it hitting record here.

But I love being able to talk with people like you about what you've seen so we can share that with the people in our audience who are also going through similar paths, right? Some of them have been maybe down the road a little bit further, but haven't seen some of the things you've seen, or some of them haven't been anywhere near as far down the road as as you've been and and they get to learn from your insights. So it's really a pleasure to have you on the show.

Sheldon Wolf (01:23)

Yeah, this would be fun.

Jeff Holman (01:25)

Yeah, be good. Be good. So y I wanna start off though, because you you have a lot of I mean, you got over three decades of experience and wanna give everyone a flavor for kind of who you are and what you've done just generally over the last thirty, thirty five years.

Sheldon Wolf (01:40)

I started off as literally a kid in the business world. I wasn't even 20 yet. I I got into real estate and of course I wanted to develop. I I didn't get in it like a lot of people where they just saw their friend get into the business and thought they could make a lot of money. I got into the business because I genuinely thought I could perform at, you know, big levels. So of course I was very, very successful. By the time I was in my mid-20s.

is already on the millionaire route and whatnot. then I started acquiring a lot of properties. Then we started getting into the land development and the new home industry and tying up projects and then we got on to the point where it was turning over buildings and converting we we s slowly slid into this investment mode and before you know it you become the guy that they call when things are bad.

'Cause if you can imagine since nineteen eighty nine to today, how many ups and downs you see? You see, I was talking to a guy, he's saying, yeah, I got into real estate, but it was right after two thousand eight, after market went crappy and this happened and that happened. And all that goes through my mind is those are some of my best times. If you people ever say, Tell me some war stories about the the downs of the business. We always know the ups because let's face it, even a turkey can fly in a cyclone. What happens when it's bad? What do you do?

Well, actually, those are my best times. And the reason is is because there's good strategy. And it's always been about how do you acquisition the customer? There's no bad times if you have nothing but back-to-back customers and your book solid every single day, three months in advance. There's no bad, doesn't matter about the economy, you're going to flourish. So it was always about the customer. How do we acquisition more? How do you differentiate yourself from everyone else there who is struggling, who hasn't figured out how to get the customer?

how to gain their confidence, whether it's confidence in in you, whether it's confidence in the market, you know, and and that's always been my strong point. I've always been able to be able to evade the that the downtime, so to speak. Yeah. And build the business that way.

Jeff Holman (03:52)

I've got family in real estate. So I I've I've seen very, very intimately what what some of those down times are and some of the, you know, some of the flourishing times. So it's it's a very yeah, it's a very interesting business to be in. I'm not in that in that business, maybe for a reason. I I have a few investments, but not in a day to day. is there a thread that because people who've been in real estate, you've seen so many things. I mean, you've been the deal makers, you've been the buyer, you've been the seller, you've you've

you know, been the the repair man probably, the manager. You've been you've you've probably been all of the roles throughout your career. Is there some type of thread or through line that you would carry from, you know, th those days in nineteen eighty nine when you were just getting started from there to the flourishing times to the to the you know the difficult times to today. W what what kind of thread ties all of that together for you?

Sheldon Wolf (04:49)

Well, one thing about me is the I come from the industry that and I don't wanna say it hates technology, but I've remembered the changes, the evolution of technology, and this is to real estate. This is to the mortgage industry. So when when we talk about fintech and we talk about prop tech and the evolution of all the changes that have transpired since let's say nineteen ninety to here we are today.

I've never been intimidated by. And I always tell people in the industry, you either run with technology or get run over by the technology. So if you see the connectivity where I've changed over the years and where I've grown, and it's always been tied to better technology. If everyone else is still using a fax machine, then obviously, you know, the world has to progress. But going back to nineteen eighty-nine, I remember.

Sitting down with customers at their kitchen table with catalogs. Yeah. Catalogs with houses. There was no internet where you log on to the MLS and you're you're you're looking at homes and and and that speaks to the acquisition of customers. Once upon a time, the realtor was in charge. The realtor was the one who had the intel, the information, and the customer relied on the realtor almost a hundred percent for everything.

Now with technology, if you go fast forward, the customer's almost in their own wor world where if they have a s if they have a smartphone in their hand, they could do almost everything themselves. Yeah. Hence hence what I built with Intelitary. But the one thing to answer your question, I've always, always grown with technology, but it wasn't just a matter of growing with the technology. I always wanted to be the best technology. I want to figure out how it ticks and how to make it tick louder.

But that goes back to 1989, where I said, okay, who's the top guy in this office? Who's the top guy in the industry? What are they doing? How do I do it better? But you put the same thing to technology and say, okay, fine, we're in an AI generation now. How do I make AI do? Never mind what I would personally do myself, which is thousands of transactions over the years. How do I do that? Multiply that times twenty thousand and come up with a really big number.

Literally where you can actually control a market. And that's what I built with Intelli. But it's once again, it's my ability to take and harness technology and make it my best friend.

Jeff Holman (07:28)

Yeah. And I want to get into what Ed Intelitary is and does and and how you've built it and what kind of things you've run into as you've been building it. before we get there though, as you mentioned technology and adopting it. I mean, I'm sure some of our people are saying nineteen eighty nine, I don't I don't don't remember that very well because I wasn't here or I I wasn't in the real estate. Like what kind of milestones, technological milestones are we talking about from nineteen eighty nine till you know till you started building this this new company?

Sheldon Wolf (07:55)

Well, here's a great story. this one comes right out of the library. I remember having a cell phone, and I remember having a fax machine, and I remember we had to move out some mortgages, and the banks that I dealt with did not even have fax machines yet. The banks didn't had to actually have them either courier there as actual paper documents, but I remember having it in.

Just shake my head. It's like, how is it that I have a fax machine? And that was the technology du jour, of course. But a bank, a national bank with billions of dollars, doesn't have fax machines at their branches. Like what? Yeah. But I remember the evolution went from there. And then the next milestone was, okay, no realtors even had cell phones at the time. They have these little beepers, but they weren't even alphanumerical. It was just a beep, they would call the office and get their message. And but that was the evolution.

And then it got to the point where you know everyone had a cell phone, but they weren't very smart back then. But everyone had a cell phone. But you got a lot of back then, you got a lot of hey, can you hear me? Can you hear me? Can you hear me? Yeah, yeah. Can you hear me? But the evolution was funny because look at real estate. If I had to put one word to what real estate is, it's a communications business, it's customers.

Dealing with a realtor who has to deal with customers on the other side of the transaction who have to deal with their realtor, but it's this big conduit of people needing to communicate. So what I think is the most valuable thing is the ability to communicate. But what's even scarier is the fact that a lot of people, as the time went forward, fought this technology. And something is simple, another story. I if you have been boring with the stories, you say okay, enough of those.

Jeff Holman (09:46)

I did space out for a minute though 'cause I was I was picturing like I I had totally forgotten about pagers. Like but I think it was probably around the early two thousands. I I bought my first home in two thousand and I'm pretty sure our realtor around that time carried a a p a pager with them and and yeah and they they were the o they were the it was like what was it, realtors and doctors had pagers. Is that yeah. That was pretty much it, I think. So anyway, yeah, no, you you caught me in a in a time warp there. I'm like, wow.

That's that's something I hadn't even thought of. So just a quick note about our guests. I host the Breakout CEO podcast to share behind-the-scenes insights from scaling businesses. As an attorney, I see the real challenges leaders face long before success becomes public. But clients' stories have to stay confidential. So we invite guest CEOs to share their own moments of struggle and success. I'm so grateful to our guests and my team at Intellectual Strategies.

For making this show possible. Now let's get back to the show.

Sheldon Wolf (10:48)

Well, it's funny how fast things change, but but to give you an idea how the industry fights change, once upon a time there was a lockbox. So if a house was vacant, you'd have a lockbox, you'd have every realtor would have a key and it would fit magically to the lockbox. You'd get the key, show the property. and that's kind of how that worked. But I remember they were switching over to this electric system where they all had to have this card and you had to enter a code, and realtors hated it. Realtors hated it, and they fought it.

And then they of course changed it to a different set, you know, the technology changed, got better, but each time they would change it, realtors would just cuss and square all this crappy stuff and this and that and they complain. And then of course, as the technology changed for the systems, the systems where you would put your normally used to send off your listings and your transactions to the brokerage and to the MLS board and whatnot.

And now there was new systems that you had to actually log into the computer and and keep in mind that not everybody was computer literate. Yeah. but now you have to upload them. You have to actually do all this work and fill in the fields and whatnot. And they hated it. So every time something changes, and even to this day I know people in the business, but they've just gotten older and older in the business. But every time they're forced to change, they cackle and scream. And it's funny because this time, this time with AI.

It's not going backwards. And even if they hate AI, you don't have to love it, but it's here to stay. And it's just going to get more and more crazy what it's going to be able to do. It's abilities.

Jeff Holman (12:24)

Yeah.

Sheldon Wolf (12:25)

And that's what's interesting. Because it's kind of a you can have a love hate with it, and that's okay. But you have to respect it, know that it's not going anywhere. So you got to run with it or get run over by it.

Jeff Holman (12:35)

Yeah. No, I think we're seeing that in every every industry. I mean the the legal industry that I'm in is is is notoriously conventional, we'll say, right? Adopting technology, you know li it's things as simple as electronic signatures. People are debating whether or not they'd be valid in in, you know, state courts versus federal courts for the longest time. And we're seeing that legal tech or whatever you want to call it now, right? A lot of AI AI

adopted technologies in legal. They're being they're being it's one of the hottest industries to invest in right now in the V C world. I don't know if it's gonna last or not. We'll see how it plays out, but it's it's certainly used to be four years ago legal tech meant nothing. And now it's like, hey, w everybody in fact that's what Anthropoc yeah, Anthropic's like, hey we released our legal package for, you know, NDAs or contract reviews or whatever it is and and and they're just jumping on it from the get go. So I I totally understand what you're saying.

with with that said, I I'm intrigued because you mentioned before that that real estate is really a communications industry. And I would think that some people looking maybe from the outside and maybe some people on the inside would say, I don't know, it was really really an information like information business. Like if you had the right information and you controlled that information, then then you know you you were the king in that community. Do you think that your view of

the real estate industry as a communications business instead of an information business has made a difference for you? So

Sheldon Wolf (14:10)

Built in teletry around two things, which ironically enough is communication, but it is information because it is a conduit for customers. It is meant to obtain customers, screen the customer, qualify the customer, match them, and dispatch them with our subscribed agents. But it's all based on information because really, at the end of the day, the customer either A wants to buy.

B, sell, C, buy and sell. They've either been approved, haven't been approved, need to be approved for financing, and then and then so it goes on the pathway. My my theology is that the winners of the future of real estate will be those that can control the pathway, control the customer journey to get them to the finish line. And the finish line is obvious they finished a transaction, the other

Buy something, sell something, or both, obtain their mortgage. what whatever that finished line is. And maybe at the end of at the end of the transaction, it's an insurance policy on their new home and and title services and all the other different monetizations I've added to the pathway of what it is we're transacting on. So at the end of the day, the customer belongs to the person which is really the monetization layer, the orchestration layer I built.

But it's all about controlling that customer from beginning to end and turning it into a transaction. And that part's easy to digitalize. And then the real question is where it leads to usually is is AI trustworthy enough in the consumer's mind today versus a real person? And keep in mind, I didn't build Intelitarian. My goal is not to eliminate realtors or brokerages. It's actually the opposite, it's to preserve the industry because

If I don't build a conduit like this, I mean, theoretically, it can be built to be autonomous. It can be built. I mean, the customer today, like I said, I used to sit down at their kitchen table with those big fat catalogs and say, hey, here's the houses. You know, today, long before you're even at their kitchen table, they've already been on the MLS on their on their smartphone. They've already researched what schools, what the crime rate is. Don't buy in this area, buy in this area.

They've already done that before you're even at their kitchen table, if you ever even get to the kitchen table, 'cause most of time they're tr what I call transact ready. They've already decided what they want. They've already picked out the homes to see. So when you

Jeff Holman (16:45)

You

when you started to build Intilitary, well tell be f right before you built Intelitary, what had you what did you accomplish so far? Because I I I always find it interesting that people who've done well for themselves, but have that that kind of builder, that entrepreneur mentality, despite having not despite, on top of having found success in in prior businesses, there's still that drive to say,

Huh, I think there's I think there's something else I could build now. Like I think there's another opportunity in front of me. Like what was that moment like for you? What where were you at? And why did you decide to, you know, pull the trigger on one more project, one more business?

Sheldon Wolf (17:30)

I see things like I said that most people completely don't see. I I built this superpower to see invisible things. Okay. And that that's the reason people would pay me to come in and fix their messes and their companies. But but when it came to real estate, the whole AI coming in, you know, the theory is, AI is gonna take our jobs. Well, the truth is AI in the future will actually get you your job.

AI will create new jobs. AI will actually have more to do with bringing jobs. But when it came to real estate, as I said, the customer is able to do so much of their own work. In fact, theoretically, today with the technology we have today, the customer can do their own purchase agreements. Yeah. You're talking about the law, the law, add add-ons for anthropic and all these other. Well, the fact is, what is a purchase contract? Is what you have to ask yourself. A purchase contract.

Is nothing more than a whole bunch of map fields that need to be mapped out. So your purchase price goes here, the customer's info goes there, the homeowner's info there, but really everything else is just a bunch of conditions which you can point and click. So theoretically, it's not impossible to say in the future, can our real estate program be autonomous? Yes. Now you say, what makes you tick, Sheldon? What makes you want to build this machine?

And why are you doing it? Well, I believe that what's happened in the industry is kind of something like the Flintstones meets the Jetsons. So this is the stuff that most people don't know about the real estate industry, but I've spent almost a good lifetime in that business. So you know all these legacy brokers, these brokerages that are literally still running archaic systems. And they're slowly but surely being acquisitioned by these new cloud brokerages.

So you have these old school brokerages that used to make a lot of money a long time ago. I mean, these companies go back to the 80s. They were around when I started in the business. Yeah. And then you have these cloud brokerages, which are all tech based. you don't have that kind of warm, fuzzy thing. It's all about we're gonna charge you nickels and dimes to hand in your transaction, you know, a couple hundred bucks. And but they built these business models that fiscally don't necessarily work. They're not performing well. The realtors are making more money, but the brokerages are kind of taking it on the chin.

Okay. So I built Intelitary as a business model to actually enhance the brokerage while also allowing the individual agents to thrive. But most importantly, the customer is the real winner as well, because I've how you say I fixed what I call a fragmented industry. The industry is just so many mixed parts and nuts and bolts, the evolution of

What used to be versus what is today. But a lot of companies I see have actually built their technology to fix today's problem. I'm gonna put my investors hat on for one second. Yeah. Because that's a big part of what I do. If you're building a company to fix today's problem, that is your first problem. Because today's problems are already fixed by 5 p.m. By tomorrow, they're copied a thousand times, and by

Seven days later, it's obsolete, especially if you're talking about AI. I see so many tools and I see so many new AI products and everybody's an AI expert, except for one thing that I see that most people once again don't see is that invisible big giant wall that they're all gonna hit.

Jeff Holman (21:10)

What is that wall? What do you mean?

Sheldon Wolf (21:12)

It's it's do you remember the big bubble? The the air every company, every tech company was all there I was just massive money going into these these companies, these tech based companies, and they just melted out.

Jeff Holman (21:29)

Wha which bubble? The two th the early internet bubble, the the recent SAS bubble, the I mean yeah, every

Sheldon Wolf (21:35)

There's

always there's always a bubble. Yeah. But but the same lesson the same lesson is everybody's just ri riding the one horse and they're not thinking that there is gonna be a bubble. I've already contemplated for that. And and the reason is is like I said, they're trying to solve today's problem. What I do is I solve invisible problems. So you say, Well what's what is an invisible problem? Explain what that would be. Something like consumer behavior. That's a problem.

I had a company that I was working with, a bunch of furniture guys. It was a big, big company, designed to be an e-commerce beast. And we went went to all the furniture shows and everyone was complaining, big, massive furniture companies. we're all sitting around talking, how do we get the millennial buyer? How do we get these guys to spend money? It's not like it used to be, and blah, blah, blah. But they're all fighting, trying to figure out how to get into the head of the consumer.

And they're all chasing the same customer. And all that went through my mind is these guys are really stuck. They're stuck in the sand. They can't figure it out all because they haven't gotten into the psychology of it. They're they're too busy just trying to figure out how to get this guy to open his wallet. But as I said, the future of real estate belongs to the person who can harness and create monetization layers as this customer moves through the process.

Why why if we're in the industry, are we not smart enough to know that? Well, everyone who's buying a house, well, maybe not everyone, but let's just say ninety-nine percent, maybe more, also need a mortgage. And when they move their house, they're also going to need insurance, and they're also gonna need title services, and they're also gonna need movers, all these other things. So when you design an ecosystem, like I would say, if anything, we're an orchestration layer is what I design. Multi-tiered orchestration level to to

Deal with the one common thing. And the one common thing is the consumer. But if you don't recognize that the customer's behavior has changed today versus it was 10 years ago, even five years for that matter, but why stop it today? Say, well, if the customer is shopping this way today, it's easy to project and say, well, what's he going to be like in 10 years from now? After all these other tools that it's realtors don't need more tools. Brokerages don't need more tools. They need more customers.

And and while they're busy trying to come up with a new tool and a new way to talk to c they need more customers. That's where the money when you go to the bank, you're depositing checks. You can't deposit more agents. You can't deposit more. Like there are all these things. I there was a thing for a while where everyone was trying to get more likes on Facebook. Well, you can't deposit those likes into the bank. Whenever I try to deposit them, the bank looks at me and says, Nope. It's all about monetization. And

Getting the customer past the finish line, that's where the monetiz monetization begins. And that's essentially how it's been built. Backwards as an investor with my investor hat on to work top down from the monetization level and deliver that monetization back into the brokerages. And that's what we built.

Jeff Holman (24:48)

Okay. Well and I think you've mentioned elsewhere kind of a distinction between the how and the why, right? A lot of a lot of these companies are are stuck on how do we get those customers to buy from us, as opposed to not why would they buy from us, but why do those customers behave the way they behave? It's a customer centric view versus a a a vendor centric view, if you will, right?

Am I am I getting that am I getting that contrast correct with the way that you've done talking?

Sheldon Wolf (25:21)

Your nail has been hit exactly on the head. It's a hundred and ten percent customer centric. If there is no customer, there is no realtor, there is no brokerage, there's no mortgage broker, none of that exists. It is the customer and how to set up a path that that customer wants to be on. The why is almost everything. How? Well, there's there's always a way, but the why, and that's what you have to address. And the why plays into their behavior and their psychology.

If if I told you a story 20 years ago and said there's going to be a point where a customer is going to press a button on their smartphone, order a box of toothpaste, and by the time they finish pressing, they're taking their hand off their phone, they're going to be running to their front door swearing, Where's that toothpaste I ordered three seconds ago? That is the behavior we're dealing with. Yeah. Today's consumer is very demanding.

And at the same time, they're more sophisticated, not because they got smarter, but what's in their hand allows them to be more. So I call it artificial intelligence, and there's artificial sophistication. It's not that they really are sophisticated, more sophisticated, but they have the ability to information a lot faster. And sometimes it's right, sometimes it's wrong. I mean, I have stupid contests that I have with AI to I chall I challenge it in a lot of cases to see, okay, who's smarter?

Do this, do that, and I'm gonna come up with the real answer and see what it comes up. But you know, it's stuff you do when you have no life like me. But but the fact is, the consumer is the heartbeat of anything you're doing, no matter who it is, no matter what it is, whether it's real estate or not, whether it's going back to my furniture days, whether it's going back to my mattrisominy days or my credit programs I ran. So it's always the same. If I do not have the customer,

There's no trips to the bank. End of story. And it's a business that's an automatic fail. Now you have a you have a system where you control the customer. Now all you gotta do is figure out, okay, how am I monetizing this? which there's there's no real large real estate companies that don't have customers. They do, but if they're failing to monetize, that's usually when I get the phone call saying, Okay, we're struggling here. We're doing we're doing 50,000 transactions, but we're losing money at the end of the year. Yeah. And and I see that.

I see that all the time. And I just think this new generation, these new brokerages, they're trying to lure more more agents in. And their way of doing that is they know that these agents used to be at places where it was a 70-30 split. So they're saying, hey, come over here for $275 a deal. You know, your your overhead's almost nothing. which is great. And it's great you're getting a high body count and you're reeling in a lot of agents.

But look at your financials. Look at look, and there's one company, and I will never mention these, but they lost $1.25 billion in the last quarter of 2025. It's another real estate company, and they just got acquisition. Actually, there's two companies that have been acquisitioned over the last 12 months. And the one was on Nasdaq and they couldn't get above the one dollar mark.

Till someone finally bought them, but now they've been bought now and now they're back under a dollar. And the real reason is you can't excite an investor if you're not making money. What excites an investor? A company making money, that's what excites them. And I just think that their problem is so easy to fix, but what does it come down to? Well, more transactions. More realtors, you're not going to deposit your realtors in the bank. You need more transactions. And that's that's kind of our thesis, and that's how we built it. That's why we're not a brokerage. We decide

We just want to be in the customer side of things. We just want to build customers and transactions and hand them to our brokerages.

Jeff Holman (29:19)

wanna get into that here and just I but I have one more question 'cause I'm super intrigued by what you've by what you've been mentioning. you you know what what is it do you think that allows you to see from the customer perspective more than a a lot of these other companies because some of these huge companies, I mean real estate has been a they're marketing behemoths, right? they're they're kind of in from my perspective on par with some of these huge personal injury law firms that are starting to

just monopolize the the markets across the nation. Is this a natural gift that you have or is this something that other CEOs could learn and leverage themselves?

Sheldon Wolf (29:59)

So I find this. I find that a lot of people live in denial. There's a reason I'm kind of like the Maytag repairman. Do you remember him? He's the loneliest guy in town because if you bought a Maytag, you never had a there was never a warranty problem because it was always so perfect. Well, a lot of companies live in this denial. When do I get the problem the call? Usually when the problems are so massive, it's a matter of sink or swim, fix this.

And I have to sign NDA so that nobody can know that I'm fixing this rat's nest and and I'm not allowed to disclose what the problems were and all that other stuff. So you think, well, let's pay Shulgun three million dollars to fix a process a lot of money. No, it's not. If you're losing three hundred million dollars each quarter, paying me three million dollars to stop you from bleeding and actually turn profitable, I'm a bargain. But I don't get calls when things are good. Nobody calls shelves.

Developers, I can't even tell you how many developments I've bought and fixed and cleaned up or or buy out their next three phases, all that stuff. Nobody ever called me in good marks. I always got calls when things were crappy, when their lines of credit were being recalled and they needed to figure out how they're gonna survive and stay in business. but nobody likes to admit they're having problems. But the fact of the matter is

You said, what else do you do when you're not working? Well, I read financials. I don't know why, but I love reading financials and studying other people's messes. They say, Well, when you're an investor and a founder, which I am, why do I need to take a bath when I can just get that free lesson watching other people take a bath? Yeah. So why do I need to make they say, when you make mistakes, well, you learn from them. Well, why do I need to make the mistake if if this company is making the mistake and I'm watching them make it?

Why do I need to mimic that just so I can learn a lesson? I'm learning a lesson by reading their financials. These guys are so enthralled by the amount of revenue they're making, but they're completely refused to look at the fact that they're losing money. They're not making a profit. So it's like those they open up the business and they say, Well, I'm buying this fidget or widget or trinket, whatever you want to call it, and I'm buying it for $10, but I'm selling it for

$50. So I'm making $40. That's a great rate of return. Except they ignore the column that, well, yes, but it costs you $100 to get this customer. So they're just looking at the one column going, look how much revenue. Yes, but you're losing every time you sell one of those widgets, you may feel like you're making $40 on it, but you're actually losing because it's costing you a hundred dollars to acquisition that customer. So I see you think, well, it's simplistic. Well, you just said Sheldon.

But I see a lot of very large companies doing that same model. They think because they're charging a $275 deal fee to their agent. And their philosophy is, yeah, but if we keep buying agencies and brokerages and recruiting more and more realtors, instead of losing 200, 300 deals operationally each time the realtor hands in a deal, it's going to change over. No, it's not. Right. It's not. It's really not.

The fact whether you have one, whether you have 10, whether you have a thousand or or twenty thousand, if you're losing every time a realtor hands in a deal, you're losing money. And each month that goes by, when you have all these realtors paying $100 a month, well, guess what happens when you just add $25,000? It just multiplies. Yeah. And you just see these things and it's like a sinking ship. And no one is smart enough to step up and say, and it's because they hate admitting they're making a mistake. And and my philosophy is this.

If you know something is five miles away from here, you've walked three miles in the wrong direction. Do you keep walking in the same direction, even though you've now realized you're in the wrong direction? Or do you say, let's fix this? Yeah. Let's start walking back that way. And but I had this conversation, actually, ironically enough, it was with that company that lost 1.25 billion, which I will not name, but every what they do each each

Seems like each year that goes by after they take a bath, they fire everybody in their C suite. All their CEOs go, their VP goes, this guy goes, that guy goes, and they bring in a new batch of people. It's like a new batch of fall guys. Here you go. Here's our new guys. Here's your new CEO. Talk to this guy. And and it's funny because they're a real estate company and they're publicly traded. And the guys they bring in, it's like, well.

So he ever actually worked a day in real estate? Does he know anything about process? Does he know anything about

Jeff Holman (34:49)

He's a professional

he's a professional executive.

Sheldon Wolf (34:53)

It he it's exactly that. They find these guys and say, well, he worked for this company. Yeah, well, there's a big difference between somebody who's ran brokerages before and someone who understands how to monetize this and fix this problem, versus well, let's get we have a big plumbing leak, our basement's flooded. Hey, I've got a good idea. Let's call a roofer. Or if we put a fireplace in upstairs, that's gonna fix the plumbing problem.

Jeff Holman (35:21)

Yeah.

Sheldon Wolf (35:22)

But but I s I s I could watch this and it's almost entertainment for me because I was talking to the guy said, Well, I can hook in and the extra fifty thousand transactions a year would fix this bleeding. And if we change the system to what you're how what and how you're acquisitioning things, you'll stop taking these beatdowns. No, we we don't have a problem.

Jeff Holman (35:45)

Yeah, yeah. We don't they don't say I call this the classic watermelon the it's the watermelon truck, right? Two two brothers sell watermelons out of a truck. They they they lose money on every watermelon that they sell, and their solution is we need a second truck of watermelons. If we just sell more watermelons, we're gonna we're gonna make it out of this hole. And that's of course not true when every watermelon the unit economics are are are are are are not working and and we think we can fix it with volume and we can't. So

Sheldon Wolf (36:14)

Yeah, yeah. But I see I see it every day. I see it all the time. And I just shake my head. 'Cause it's funny 'cause it seems to me the bigger the problems are, the more of a denial they live in. And and all that goes through my mind is there's a lot of investors who needlessly take it on the chin. And I I feel bad for a lot of these companies. I mean y those are the ones that are publicly traded, but even before it gets to that, I mean you look at a lot of the venture capitals out there acquisitioning and funding some of these

Some of these startups and I just shake my hand, go, you you talk about that wall that's coming up. It's like this, you you just invested in a clone of a clone of a clone. It's just copycat, copycat. But as I said, it's you're solving today's problem, but it's already been solved by a thousand people. you need to do something unique and different that gets around that is not afraid of that wall. We go right through that wall. We don't really care because we know that this customer is always going to be.

If it's done properly, you're gonna keep control of this customer and and they'll follow your path. We built the whole, like I said, the whole ecosystem, the whole orchestration layer. You know, it's funny because I built it to kind of mimic something that's already tested and true.

Jeff Holman (37:30)

What is that?

Sheldon Wolf (37:32)

Take the best western. They're a really good example. Best Western doesn't always own hotels. A lot of times what they what they do is they feed independent hotels that happen to be under their brand. Yeah. So when you're going to a Best Western hotel, most of the time it's owned by a different company. But the Best Western's job, easiest way to explain it, is their job is to get the customer from Best Western.

And land a paying customer, a ready to transact customer at the check-in desk of whatever independent hotel, whenever, wherever in the world. And that is their job is to monetize the customer and get them to the desk. And then the hot the hotel clicks in and says, Great, we'll take over from here. And that's essentially what we built. We said, We don't want to be in the brokerage business. We don't want to have to recruit and babysit and all that other stuff. We'd rather just deliver the customers.

We want to deliver 50,000 customers to the brokerage, and they can handle the logistics of their agents and whatnot. But it was built specifically to fix the problem of what brokerages are facing today, where they're charging these needlessly low fees because realtors are making more money. They wouldn't have a problem paying a little bit more. But at the end of the day, they're using it as a recruiting tool to have silly low fees.

But in most cases, when a brokerage is dealing with Intelitary, they're gonna actually make more money from our transactions than than they're gonna make even from their realtors paying their deal fees.

Jeff Holman (39:09)

Well, how does that work? 'Cause on the one hand, it it sounds like it's lead gen for brokerages. You're you're gonna feed them work, but I don't think that's I I I think what you've talked about in other places it's more than that, right? It's you guys are you tell explain what that is, what that you built that is beyond just we're you know, you're not just the best western feeding hotel customers to individual hotels, right? You're you're putting more structure in place. Explain what that is.

Sheldon Wolf (39:35)

Okay. So let's talk about let's talk about something like realtor.com, Zillow, Truly, all all these companies. You talk about lead generies. Customer goes to the website, fills out a form. My name's Joe Smith. I'm looking to I'm hoping to buy a property. here's my phone number, here's my email. They take that, they sell it to realtors who buy leads, whether it's

$60, $80. they I'm sure they have their scoring matrix. They're done. They're not that's the end of the rope. the difference being is our AI technology. So for example, I'm not gonna put a name to this, but in general, the rule of the industry is for every hundred people that go to the website, maybe one to three percent of customers will actually fill out that form.

Which then they monetize and sell for whatever, fifty, sixty, seventy dollars, let's say. Yeah. We're a little deeper. So first of all, when you go to Intelite, you're gonna meet Chloe AI. Chloe AI is as realistic of a conversation as you and I are having right here, right now. So difference being Chloe AI was personally designed by myself. Chloe knows real estate, in fact, she knows more than me because.

Every single state is different, every single city, every municipal municipality, et cetera, et cetera. She's going to actually interview you. So she's going to start asking you and say, hey, welcome to Intelligent. Are you looking to buy a home or are you looking to sell? And engaging you that way. She's going to start asking how soon, how soon is important because she's trying to find out, she's trying to score you to find out how motivated you are. Okay. she's screening you, and then she goes to a different point where she qualifies you. She's gonna

Pop something up, say, Hey, I just noticed you haven't registered. You're going to register, put in your info. And then she's going to call you and she's going to vanish off your screen. She's going to take you from being online to offline and she's going to say, Hey, we were just chatting online, Jeff. And I just want to chat with you to ask you a few more questions. I'm just gonna ask you, you know, are you looking to, know, back to the thing, well, you wanna buy? Have you sold your home yet? Or are you renting? And

Have you been approved? That etc. etc. etc. She's gonna collect all the data, all that stuff. And then she's gonna say, Hey, I can connect you. This is the dispatch part. I can connect you to so-and-so who's in your city. He handles this specifically. You're actually getting a customer hot transferred on the phone. And that's one of the reasons she calls you versus she wants to get you offline so that she's on the phone with you, so she can attach you directly through to our partners. Now.

The second part of it is because there's lots of different layers of this, she's going to act, you know, people say in one sentence, explain and tell it to me. Take Zillow, Uber, and Match.com, throw it in a blender with some tequila. So she's gonna find out who you are, what you want, when you want it, where you want it, etc. etc. Make sure you're not a tire kick, you're just kind of mu mucking around, wasting time. Cause when you when you are buying leads, if you're a realtor buying leads from whoever, whatever company, there's there's

There's a known statistics where fifty percent of the leads you're gonna buy, you're never gonna actually talk. Yeah. You phone them right after you get the lead, no one answers. You call back the next day, no one answers. And and sometimes they're not even real phone numbers or real customers. Here, I'm actually putting a real customer on the phone with you. and that's essentially the long and short of it. It's a little bit more entrenched than that and a little bit deeper the learning, but the conversation you're gonna have with Chloe is really

Going to feel a lot like this because we've implemented what we call AIAV, which is audio video. So your conversation is going to look just like you're going to see Chloe instead of me. And your conversations can be fully engaging. any question you could possibly have that pertains to real estate in your locality, she knows she has access as well to everything that if you were shopping for real estate, looking through MLS.

He said, Yeah, I'm kind of looking for this and that and that. And I want this area, but I don't want that area. Her her abilities are beyond comprehension. she'll be able to give you an evaluation on your home, of course, with proper disclosures and whatnot. Right, right. But she'll she'll be able to guide you. But her real goal is to put you on the phone with one of our specialists. This was built for the preservation of the industry because I see two futures. One is the future that I'm building with Intelitary.

And the other one is the evolution where people eventually say, wait, why do I have to even deal with a realtor on this? Why do I need to have a realtor to sell my house so I can just do this and do that? Why do I need to have a realtor if I could just fill out this offer to purchase myself? That is what's gonna happen as time goes on. We'd be kidding ourselves if we didn't. This is to make sure from my side, keep in mind I've spent a lifetime in this industry, that the brokerage stays a thing.

It stays a thing and stays keeps a monet an ability to monetize.

Jeff Holman (44:55)

Yeah, that makes sense. And you and you mentioned early on about the importance of communication, that real estate is a communications communications industry. And so it's it's almost maybe the natural the natural step for you to say, Hey, we're gonna we're gonna actually build a system that focuses on the hand the communications handoff to you know, between the customer and the and the the realtor because that's where the magic happens. That's where the connection happens, that's where the relationship is built. Yeah.

Sheldon Wolf (45:23)

It's yeah, it's the difference between what they would buy from lead generator companies who they they sell data. Whoever filled out a form, here it is, goodbye. See you later. We don't care if you sink or swim, we don't care if you close the deal or don't. Right. We hope you do because then you'll be back to buy more. But if I got paid if I got paid a dollar for every person who was buying leads and I I rarely, rarely talk to anybody who loves the leads that they buy. And then I say, okay, well, the next thing is they can advertise and get their own leads.

And then they say, well, yeah, but when I do that, the problem is maybe two in every hundred actually become a paycheck. Right. If that. And then that depends on the quality of the agent as well. But it's it's there i in this industry there's this thing called the ninety ten rule. Okay. The ninety ten rule is this ten percent make ninety percent of the money and the ninety percent make ten percent of the money. And then you say, Well, how many were there like Sheldons up there? Well, that's one percent.

If you're in the top 1%, yeah, you're making the millions of us. If you're in the 2%, yeah, you're making a good six-digit income. But as soon as you drop under that 90%, it just plummets. And the one reason, and it really comes down to a simple reason why there's such a big gap between success and not success, and why there's such a big bottom. And it's all about customer acquisition. They either don't advertise.

Or buy leads or do anything to build? So imagine any business, translate that to any business. Imagine you open a store or restaurant, but you don't have food. You have a menu and you don't have food. Well, how do you expect to have people come back? And how do you expect people to do and you won't invest in yourself? Why would you want your customers to work with you? You know, what makes you think that if you're not prepared to, you know, spend a couple bucks advertising each month to make yourself relevant to actually attempt to get customers? Why would you want anyone to why would you want

Why would I want to list my house with someone who I know is not gonna advertise? Not gonna put any effort into selling my home.

Jeff Holman (47:25)

They don't they don't have the distribution. Well, so I'm c I'm curious, as you've built this, w w what's worked and w what are some things you've run into that surprise you because they didn't work?

Sheldon Wolf (47:36)

Well, because I know too much. I mean, after three and a half decades, I know too much about the industry. There are some excellent, excellent, really professional go-getter, high-end realtors out there, great agents, been around a long time, they know what they're doing, but as I said, it's a ninety ten rule. I built this because I thought, well the guys who know what they're doing, I mean back in the day

You'd wait three months just to get an appointment with me. It was I need I didn't need customers anymore. It was just the point where we have so many customers, only so many hours in a day. And there's this monetization that I think is available. I think if you say, What's the problem with the brokerages? They're not monetizing that 90%. There's a lot of realtors that could be doing well, but they're struggling to get the customer. I wanna mo I wanna be able to monetize that.

for the brokerages. It helps it helps the agents that are suffering. It helps the brokerages monetize people who normally wouldn't. And if they're doing less than and you get a whole bunch of these people that do zero deals in a year. Or they do one or two deals in a year or three, it was an average when you get to that 90%. And there's no reason if they had a customer and they have the ability it's not that they don't have the ability. They do. They just don't have the customer. And unlike the leads where they just get here's a bunch of leads. Good luck. Have fun.

The old Glengarry Glenn Ross days. Well, here's a customer. This customer has found this house and this house, and they're looking to possibly put an offering on this. And they have a home over here, which they want to sell. It's not listed, go in there, your appointment's already made. Get in there. Get in there. so as long as they don't fumble the ball, this is about serving up low-hanging fruit to people who need the who need to be monetized and need to make a living for themselves in turn.

Realtor's gonna make some great money. But the brokerage is getting new revenue that they didn't have before. So you think, say, what agency, what brokerage wouldn't want an extra bonus 50,000 transactions here? I mean, you're talking that translates into hundreds of millions of dollars. Yeah. Zero will say no. And if they do, well, then it's one of these companies that has employed a whole bunch of people who've never been around the block before, you know. Yeah.

Jeff Holman (50:00)

Well w w where is this where is the is the model just working everywhere then? Like everyone you talk to, everyone sees it, they demo it and everyone just adopts it or is it Yeah.

Sheldon Wolf (50:11)

We're built to go national. Uh-huh. So one of the things he said, what works, what doesn't work. If you build this model and you build it where each and every single agent has to subscribe independently, it would be like herding cats. Sure. This is one that has to be done because of its size and its scale. As I said, I don't want to be another brokerage. We didn't build this so we could say, hey, let's be another brokerage. We don't want to compete with the brokerages. We want to

facilitate the brokerages. So we want to have our direct relationship with the brokerages. Where we now? We're in what I call evaluation stage. One thing I won't do is put together a transaction with a with a mega brokerage with 25 or 30,000 agents. Yeah. and have it that I regret doing that. Same thing on the other side. The other side, well, we're looking for a third party investor, because I've taken it quite far.

Well, fairly sizable pockets in order to facilitate its growth to this point. But I'd be I'd be a disservice to my own company if I didn't get third party venture capital cash. but at the same time, do I just jump at the first guy who waves a check? I mean, do I think that lots of venture capital would like? Yeah, well, I mean, I I may I make no bones about it. I built this thing backwards as an investor. I have no doubt in my mind that the valuation after

shortly after life, it's designed to scale fast. It's designed to evaluate high. I have absolutely no doubt in my mind this thing's going to do what exactly what it's going to do. so investors aren't a problem. The right investor is the thing that I look for. So if if they don't understand prop tech and they don't understand the magnitude of what it is that we've built, they're probably not going to be a fun partner because it'd be like having a backseat driver that doesn't know anything about what you're doing.

But yet has this crazy opinion. I know how to scale, I know how to get acquisition the customers. And I built this magnificent machine that generates revenue cash flow. And unlike a lot of companies, I actually do look at the profit and the CAC and all those other details. Like I said, this was built backwards from the investor's point of view to facilitate an industry. And the industry happens to be a trillion dollar industry. And let's face it, it goes above and beyond that wall that's coming our way.

Why? Because guess what? In five years from now, someone will still need a roof over their head and control of this acquisition. I've controlled the customer for for thirty five years. I don't plan on not figuring out how to control a customer. So it there's a lot of really compelling, interesting things going on here.

Jeff Holman (52:55)

I love it. I love it. Well, I appreciate you taking the time to share this with us on the on the show here. If if you were talking with other other CEOs that are out there contemplating or or actually building or or operating in this space with, you know, prop tech technology, SaaS or or something like that, what what would you what would the two of you talk about over lunch? What were what are the the things that would come up? What are the tips that you'd hear or that you'd share with somebody like that?

Sheldon Wolf (53:25)

I'm a market share guy. I always look and say, and maybe maybe I'm insatiable when it comes to this, but I'm always looking saying, how do I grow it to this? How do I hit my my five my path or how do I make it so I cross that finish line where if this is my target, get there. So back to trillion dollar industry. There's a reason I play in this industry. I'm I'm building prop tech because it's allows me to deal with my insatiable appetite.

And you say, well, take Uber as a good example. Uber came along, they're a massive unicorn operation. they made billions of dollars. And guess what? Lyft came along, Uber's still in business, taxicabs, still on the road. The bottom line is why is that? Well, because the transportation industry is a trillion dollar industry. And when you have such a big giant market.

I know this real estate not it's not gonna just disappear. There's a lot of things that will probably disappear over the next so many years. Real estate's just not one of them. the services and being able to solve a problem for a consumer and create that monetization path so you can take a customer from A to B and have them cross the finish line. That's where the revenue comes from. I mean that part to me is the easy part, but it's the part yet so many, so many of these companies miss.

Jeff Holman (54:55)

Interesting. Well, Sheldon, it's been a pleasure talking with you today. I really appreciate it. the and for our for our listeners, it's it's really insightful to be able to hear from somebody who's been through various stages over a long career, and and is still, you know, has had success and is still building towards more success. So that's a it's it's really valuable to have those insights shared with the audience. So I really appreciate you taking that time today.

Sheldon Wolf (55:23)

Yeah. Thanks for having me. I appreciate that.

Jeff Holman (55:25)

It's been great. And for our audience who's listened to the show today, thanks again for joining us on the Breakout CEO podcast. Be sure to follow or subscribe on your favorite podcast platform. And if you enjoy the show, a rating or a review goes a long way. Our mission is to promote the stories of breakout CEOs in scaling SaaS, e-commerce, and tech companies to equip peer CEOs with valuable perspectives and confidence.

Thanks again for joining us on this episode of the Breakout CEO. I'm Jeff Holman, and I'll see you next time.

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