DURHAM, N.C. — Four years ago, Mike Schneider and his colleagues participated in a start-up competition called Real G Forward and won the runner-up place.

They sat down with hundreds of real estate agents and listened to the challenges and problems they were facing.

Four years later, they are stilling solving the same problem.

“That was really validating the problem we had been solving,” said Mike Schneider, CEO and co-founder of First Leads Inc. “It’s also memorable because when I look back at that, the problem itself is still really relevant and there aren’t many other great solutions yet.”

Mike Schneider, CEO and co-founder of First Leads Inc.

In 2014, understanding real estate agents’ needs, Schneider co-founded First with Jess Martin.

With 31 employees, the Durham-based company is currently tracking 214 million individuals and 140 million homes in order to help residential real estate agents know where they should spend their time to grow their business with enriched database.

In May, the company raised $5 million through a private stock sale, according to a Securities and Exchange Commission filing.

A platform targeted for real estate

In real estate, most business is won through relational connections instead of marketing and advertising. However, even the top agents are missing the majority of their connections — around 80 percent according to Schneider.

Real estate is a massive but fragmented market, all the way down to the individual agents. This makes it extremely time-consuming for agents to make decisions about relational efforts.

“Their problem was that they felt tremendous amount of guilt around who they should be following up with because they have some many people, hundreds of, thousands of past clients,” Schneider said. “They know that’s where their businesses were coming from, but there’s no system. They will feel really inefficient.”

By tracking the home-selling behavior of 214 million people in the U.S., First is able to analyze patterns that help real estate agents focus on relationships that they should prioritize and prevent them from losing valuable clients.

“We are able to, with machine learning and lots of data, identify who’s actually thinking about transactions and hand that to real estate agents so they know where they should spend their time most effectively with people across the community,” Schneider said.

Schneider pointed out that the main difference between First and other major networking software such as LinkedIn was that it’s vertically targeted for real estate.

“I might be connecting to lots of people across different industries through LinkedIn,” Schneider said. “But for real estate agents, what matters is whether these people are going to buy or sell a house in the next year.”

Another thing that separates First from LinkedIn is how the software platform participate in agents’ day-to-day workflow.

“A big part is that we’re following up on people and we’re connected with their emails and their phones. We can understand where they are connecting with people and we can surface people they haven’t thought up for a long time,” Schneider said. “LinkedIn won’t know how you are interacting with people on other platforms.”

First Leads Inc., a Durham software company, raises $5M in equity round

Competition and care for privacy

The main competition for First, as Schneider pointed out, comes from data science companies for the residential real estate market.

However, indirect competitions could also emerge from other platforms.

“Largely when we look into what we’re providing to our agents, it’s an alternative to buying leads from Zello,” Schneider said. “They can choose buy a cold lead they’ve never met or purchase First and reinforce and focus more of their energy on people they’ve known.”

Having been in the market for four years, Schneider said that the structure of its customers hasn’t changed too much.

“If anything is changing, it’s that real estate agents are becoming more tech savvy and leveraging more technology to help them better serve the customers,” Schneider said. “And I think that is reinforcing our values.”

First is currently leveraging different data from its software platform and third parties. The company has partnered with data providers to build models used in the software.

As the Facebook–Cambridge Analytica data scandal broke out this year, there’s an ongoing concern about the privacy and safety of users’ data. Schneider said that First was working hard on privacy issues and being cautious about which data provider they chose to work with.

“We chose one data provider over three others because how privacy conscious they were. And even though that meant we can do less with the data, we actually went there because we want our clients’ data more secure,” Schneider said. “It turns out that one of the other players, Equifax, had a big hack after that. So we are glad that we chose the data provider we used.”

What’s next for First

Heading into a cooling real estate market, Schneider was not concerned about the declining home sales.

“I think it’s not like anything like we were in 2007 and 2008 when there was a bubble, it’s just more correcting,” Schneider said. “Also, our primary business has been with the top 10 to 20 percent of real estate agents, and I don’t think that they generally slow down in cooler markets.”

First has been considering an international expansion. However, its approach to go to Europe was deemed impossible since the core data it used on predicting when people will sell was not available in Europe due to different privacy standards.

“We don’t plan to expand internationally except for probably Canada at this point,” Schneider said.

Schneider explains that what First is doing as the next wave of technology that targets a specific industry-focused business problem and understands what data and machine learning model can make that better.

“We build product and get to scales because it can actually learn from users. When you signed up as the 10000th user, the platform has been trained by 9999 others. The fact that it can learn from 9999 users and apply that to you who just signed up today makes you much more effective,” Schneider explained.

“That’s where technology is going. You’re be able to be plugged in into a system that has understood from users who are just like you but be able to make the products much more better because the data behind them.”

This story is from the North Carolina Business News Wire, a service of the UNC-Chapel Hill School of Media and Journalism