If you follow public stock market investing, you know the name Warren Buffett, the famed "Oracle of Omaha" that has helmed Berkshire Hathaway (NYSE: BRK.A) for decades. Berkshire Hathaway owns companies or major stakes in such household names as GEICO, Diary Queen, Fruit of the Loom, Kraft Heinz, and scores of others. Buffett's famous investment strategy is to acquire companies with strong management teams and let them continue to drive results without interference.

What does this have to do with StackSource?

Well, Berkshire Hathaway is a 50% owner of the commercial mortgage company Berkadia. Berkadia's business involves arranging commercial real estate loans, servicing those loans, and selling apartment buildings. Berkadia is currently the eighth largest commercial real estate lending intermediary in the United States:

Above is a snapshot of a database where we track all the companies in our industry that arrange commercial real estate financing for real estate investors, so they are competitors of StackSource at some level, though most do not have any proprietary tech, and many do not even have a plan to adapt as the industry goes digital.  We're currently tracking over 200 companies on this list, ranging from large public companies like JLL and CBRE, all the way down to local teams of 2-3 brokers banding together independently.

Berkadia is the first company in the top 15 that we've marked as "High" urgency on fintech.

Berkadia is not only investigating startups in their wake, they're putting their money where their mouth is. They invested in, then bought out a startup called RedIQ that was (still is) aiming to streamline the underwriting process for multifamily properties. They've hired over 15 people on their "Innovation" team reporting to a Chief Innovation Officer so far. And now, they are gearing up to make a direct push into digital lending later this year, hiring up to 20 more engineers and operations professionals to do it:

Is StackSource screwed?

Heck no!

Do you realize how validating this is? We saw what was going to happen in this industry years ago. We're years ahead on product.

Listen, Warren Buffett has more resources than we do, that's obvious. While our awesome investors have trusted us with a couple million dollars to work with and we'll be able to move forward hiring some awesome people to keep building and growing our platform, Berkadia's innovation budget dwarfs that.

So what?

Berkadia is originating $26 Billion of loans every year already. There are 7 companies doing more volume. Let's say their new tech platform succeeds wildly and they rise up to the the top 3, or become the leader in this industry.

Do you know how big the commercial mortgage industry is?

There is more than $3.5 Trillion of outstanding loan volume in this space. Will we compete to serve some of the same clients? Of course. But the bigger effect will be that the innovators will continue to take market share from the sticks in the mud. From the 7 competitors above, to the 200 competitors below, they'll all need a strategy to win business in this new era.

Taking notice

If Warren Buffet's company is starting to wake up to fintech, it's going to nudge some other sleeping giants. If nothing else, CEOs will start fielding some hard questions from their shareholders when the market leaves them behind.

We heard from a friendly source at a major real estate services company the other day that there was chatter about this trend and StackSource was specifically mentioned as a potential acquisition target. We've already received inbound interest from several larger brokerage companies wanting to know more about what and how we're doing. Most are just trying to gather intel, and have their MBA business operations guys put it in a SWAT Analysis on the whiteboard in some executive conference room. It will take time for these larger companies to figure out what's happening, and develop a fintech strategy.

This is exactly what has been happening with big banks grappling with fintech startups for the last decade. Spoiler alert: fintech startups have persistently led the market and built valuable new services for both consumers and businesses, and only banks that have learned to adapt have thrived.  Traditional real estate finance companies will need to adapt or die.

Looking ahead

We expect the interest in partnerships or acquisition opportunities to continue. Honestly, it's probably a distraction - multiple times already we've been told by a "buyer" that they were serious, only to waste time in multiple conversations for nothing to happen. If we decide it's time to sell later, we'll run the process and make it happen.

For now, the path is clear: Build!

Build the team.

Build the platform.

Build the pipeline.

Build our reputation.

The future belongs to those who build it.

Let's get after it

Once this round closes, here's the plan:

• Exhale. Inhale. Set our eyes on the goal: creating the best commercial real estate finance platform the industry has ever seen.
• Hire Capital Advisors, analysts, sales leaders, engineers, and UX. Give them the right resources and let them do what they do best.
• Triple revenue this year.
• Roll out tools and features that will change the game for our clients, and give our team of Capital Advisors an unfair advantage.

It's the top of the second inning for real estate fintech, and it's time to step up to the plate.