Esusu co-founder Samir Goel’s family had a rough time when they moved to the U.S. from India. His father was mugged on their first day in the country.

“We didn’t really have a place for shelter and most of my upbringing was actually watching my parents work miracles, specifically with no credit and limited access to financial resources,” Goel told Protocol.

That led Goel and co-founder Abbey Wemimo, an immigrant from Nigeria, to launch a startup that offers a way for renters, particularly low-to-moderate tenants, to strengthen their credit profile.

Esusu’s technology makes it possible for landlords to report rental payments to credit bureaus, helping tenants improve their credit. “We have seen the average credit score improve by 51 points on properties that have implemented Esusu,” Goel said.

Esusu also provides short-term rent relief loans from a pool of funds from philanthropic organizations to tenants struggling with emergencies. The loans are interest-free. The startup, which is based in New York, has partnered with about 100 landlord and property management companies in 50 states, covering 2 million rental units.

Most fintechs in real estate focus on homeowners or buyers. Esusu is a leader in the arguably underserved nmarket niche of renters, said Alex Johnson, director of fintech research at Cornerstone Advisors. While the use of rental data for evaluating credit worthiness is still relatively new, Esusu is blazing a trail in an area of fintech that’s poised to grow, he added: “The direction of where this is all going is very clear, which is that eventually lenders will use credit scores that take rent data into account.”

Esusu allows property owners a view of how their renters are performing, while keeping the interests of tenants in focus, he said.

In an interview with Protocol, Goel described how he and Wemimo decided to focus on a new, untested market and how the pandemic and the housing crisis it created transformed Esusu.

(This interview has been edited for clarity and brevity.)

Where did the idea for Esusu come from?

When we initially started Esusu we launched a savings app, and it was kind of predicated in a rotational savings, collaborative type of savings model, where people form groups of trusted family and friends to pull money together and take turns to make big-ticket purchases. That was something that both Abbey’s family and my family did to make ends meet for some time. That’s what we started with.

We very quickly realized that acquiring customers is really hard direct-to-consumer. More importantly, when we’d actually talk to people, the folks using our apps, the communities we’re trying to serve, we just learned that everyone knows you need to save money. The real fundamental issue was access to capital and cheap credit. That led us to think about: How do we help people build credit?

That’s how we pivoted into what we do today: to have apartments with large multifamily owners and operators or landlords report rental payment data into the credit bureaus so that renters can build and establish credit, while at the same time, giving landlords a good incentive to drive on-time payments and attract tenants for longer.

We then paired this with our rent relief or microloan program where when renters fall behind on rent, we pair them with 0% interest loans paid directly to the landlord, so that we can keep renters in their homes.

Was there a specific experience that made you decide to focus on renters?

We learned that it was really hard to differentiate between all the fintech apps out there. Secondly, building trust is really hard. It’s even harder when you’re talking about low-to-moderate income communities, minorities, immigrants because financial technology requires you to get a lot of information upfront.

We had a series of experiences where people were like, “Look, I’m just not making enough money to save more,” or “Hey, I was saving but my job got cut. I had a health emergency.”

Can you talk about the first landlord you approached with this system?

The initial barrier to entry was actually getting landlords on board. One of the things that we’ve done in our revenue model is the cost burden falls on the landlord and not the renter. We were very intentional to make sure that we’re not creating additional expenses for low-to-moderate income folks.

So the initial challenge that we faced was getting landlords to adopt this. We started working with landlords who were most socially oriented or had a large affordable housing population. That was where we cut our teeth.

Renters can build credit. They can get access to cheap capital when there’s a financial emergency and landlords at the same time can incentivize people to pay on time and improve their cash flow. That’s really what happened. A couple of our initial partners are pretty huge landlords in New York City specifically.

So the first landlord you worked with was a big landlord, not a small mom-and-pop apartment owner.

We had learned the hard way with the savings app that we wanted to think about scale from a business standpoint but also from an impact standpoint. We wanted to be able to sign one contract and impact the lives of 20,000, 50,000 people, rather than one contract being five people or something like that.

How many renters were in the first apartment complex?

The first commercial landlord that we signed had about 15,000 rental units. We partnered for two assets, one in Harlem and one in Connecticut. That was a total of about 1,000 units of their portfolio.

Tell me about the very first meeting. How did the conversation go?

We got a warm introduction through a mutual connection. We went into their office and they had a lot of questions. When we talk to landlords who are both commercially minded and impact-minded, we get all the commercial questions like: What’s the value proposition to us? We’re all cost-sensitive. Why are we paying $2 per unit per month? What’s the ROI?

Then there was a series of operational questions: Will this create additional work for my staff? Every single landlord is overworked and understaffed. So if there was too much work, that’s really important. They’d ask: How does the data flow from your system to ours? What kind of notifications go out to residents? Does my staff have to do anything? What if you report the wrong data? Are we at risk of a lawsuit? So all of those kinds of operational questions.

Then finally the impact questions: Does this actually improve the resident credit score? Is there any downside? Are you going to report negative data? So those are the three buckets: the financial, the operational and then the impacts.

I think the meeting went well. But actually, at the time, Abbey and I were pretty jazzed up but we didn’t know, really. So we followed up two or three times. We originally spoke with an SVP of asset management. They didn’t really say anything. Then all of a sudden she CC’d an asset manager on our team and was like, “Hey, this person is going to run the project. Here’s the signed contract. Go.”

It was kind of surprising. We didn’t even know that we got the deal.

So typically, when you pay rent, it is not reported to the credit bureaus?

Actually, it’s even worse. What happens is if you are evicted or you default on your collections, that’s on your credit report. But nothing positive historically has been reported for rental data.

Do you work with all the credit reporting agencies?

We have integrations with Equifax, TransUnion and Experian. We take rental data and we transform it into the kind of output that’s needed for it to be incorporated in a credit report.

I’d say we’re the largest player by scale in this industry right now. This wasn’t even possible until about 2013, give or take. There was legislation and a mindset shift with the credit bureaus that allowed for alternative data to be considered.

There were a lot of people talking, but nobody wanted to do the dirty work of figuring out how to capture rental data at scale, because it’s so disparate, to transform it and report it into all three credit bureaus. Because all three credit bureaus have different ways of taking their data. It was just such an operational landmine. Nobody was really willing to take it head on. What we did in that 2018 to 2019 period was build all that plumbing or infrastructure. That’s what’s allowed us to scale so quickly today.

How did the first six months go? What things went well and not so well?

Great question. The things that went well were the impact. It was really easy to see the impact we were having for renters. A hundred percent of the time we could establish a credit score for a renter that had no credit score. For folks that had lower credit history, we can improve their credit score by 20 to 100 points. So that was a pretty significant and clear impact.

Where we kind of got stuck were two things: the operational piece and then the cost piece. On the operational piece, landlords basically didn’t want to deal with transmitting data to Esusu in a manual way. That makes sense. There’s data security and privacy. There’s also just the workload that that requires. So we had to build integrations into property management software, which is basically the operating system that landlords use. That reduced the amount of effort needed to onboard Esusu exponentially.

From the financial point of view, we had to prove the business case more. We had to be able to show the correlation between rent reporting and on-time payments. We also incorporated the rental assistance program. We were able to give landlords cash directly to their bank account which makes it a much more compelling ROI, because we’re able to find philanthropic capital to support renters, which at the same time helps landlords get paid. That one-two combination really helped.

The third thing was we added in a layer of analytics and impact reporting. Now landlords can understand the risk in their portfolios. They can see the impact. They can use it for their publicly-facing ESG [environmental, social, corporate governance] reports. They can use it in their stakeholder reports. They can use it for marketing.

What happens when a renter falls behind?

There’s two kinds of archetypes of renters who fall behind on rent. There’s the people that really are trying their best to make ends meet, and they’re hit with a tough time. Then there’s the people who are irresponsible or looking to game the system.

The unfortunate thing is that because of Renter No. 2, the whole system is oriented towards preventing Renter No. 1. In the process, we marginalize a lot of renters who just really want to do the right thing.

What we’ve done is built a system that supports Renter No. 1. If people have a financial shock, we’re able to support them and give them time to kind of get back on their feet.

So if I’m a renter and I lost my job or there was a medical emergency and I’m just not able to catch up, I get access to a loan.

It’s a loan with 0% interest. The whole point of our fund is for it to be evergreen. When people repay, we’re just able to reallocate that capital to other renters.

So it’s a pool of money for emergency loans. Where do the funds come from?

The majority of it has been sourced from philanthropic institutions.

Let’s go to the business model. How do you make money?

We charge the landlord a one-time $3,500 setup fee, and then it’s $2 per unit per month.

What were the problems or unexpected issues you had to deal with in your first year which maybe led you to tweak your operations?

It wasn’t enough to have a technology product. We needed a services layer. We needed to make sure that we manage the end-to-end onboarding and enrollment of renters so that property managers do nothing. What that looks like is we actually do all the communication with renters. We do all the training for property management staff. We do all the customer support and FAQs. We do all the dispute management.

Before we had this impression that we were just going to plug in our technology and it would kind of magically work. [But] there’s a lot of work that needs to be done educating the tenants, educating the staff. We learned that we need to have the platform with the services to make it a seamless implementation for our partners. That was one learning that really stopped us from getting a lot of deals early on we were able to fix and iterate on, and now we kind of manage the end-to-end implementation and rollout process.

No. 2, one piece of feedback we got is that nobody in real estate wants to contract with five companies to solve one problem. That one problem is resident financial stability.

So [if] we’re only doing rent reporting, but then they need to contract with someone else for rental education and they need to contract with someone else for rent relief, it doesn’t work. That’s what pushed us to move away from one product to a platform-based approach.

What happened after the pandemic started and housing became a serious problem for a lot of people?

The pandemic was kind of the best and worst of times for Esusu. From a business standpoint, we grew 6x over this period. We saw a ton of momentum, a ton of interest and one of the reasons is because I think our potential clients realized that they needed to move out of the old model which is: Renter doesn’t pay rent, we’re just going to evict them.

That results in a ton of irreparable damage to everyone. The landlord spends a ton of money on evictions. The renter obviously is homeless, and may not be able to find another home. We as a society spend $150,000 rehabilitating each homeless person.

It was just a total lose-lose. The pandemic created a new environment where people were forced to think differently.

What was really tough, though, is just seeing the amount of trauma and pain that people were going through. Abbey and I get calls still every day from renters who are just like, “I’m going to be evicted. Somebody passed away. I lost my job. My kids need help.”

It’s just crazy how many people are going through so much right now. I think we kind of ended up being an intervening body at a time where kind of policymakers were figuring out what to do. We saw a ton of momentum and a ton of interest, but also a tremendous amount of need.

Has there ever been a landlord that you had to break ties with because of abusive or unfair behavior toward renters?

I think most landlords don’t actually want to evict people. Most landlords don’t actually want to do wrong by their renters. And most renters are working hard, trying to make it work. What we’re trying to do is find a better way to align incentives. People want their stable housing, and landlords want to be able to provide housing for people and also make money as they’re entitled to do.

But we did have a landlord that we partnered with early on and very quickly realized that their primary goal was to kind of pass down the cost to the renter with a serious upcharge. They were making the process so oriented around making sure the renter was paying them. It just didn’t align with our ethos. We just didn’t like the mindset that the landlord had. The last thing that we want is for this program to be another excuse to put an exorbitant fee on someone who’s already low-to-moderate income.

There are a lot of landlords who really love late fees. That’s a big revenue source for them. They love their late fees. If they’re going to do something that benefits the tenant, they better make a premium on it. That was really frustrating. That’s not to say that no landlord should ever upcharge. A service like this, that’s their prerogative. But I think the manner by which this was done really rubbed us the wrong way and we severed ties with this partner.

Housing is still a serious problem as the pandemic continues. How do you view the situation right now?

I think we’re at the brink of a homelessness crisis. There’s well over 5 million renters that are behind on rent that are at risk of being evicted. A lot of states that don’t have renter protections in place right. It’s very easy for renters to be evicted. And if we have evictions at the scale of what’s possible, we’re going to be facing a homelessness crisis in this country.

An interview with Antoine Nougué

Antoine Nougué is Head of Commercial at Checkout.com

The world of payments is changing — and fast. As more of us shop online, businesses are trying to break down barriers to making payments and purchases online. The goal is to improve payment performance, and utilize the role of payments as a strategic tool for growth.

To do that requires an enormous amount of expertise, as Antoine Nougué, head of commercial at Checkout.com — which is approaching a decade in business — explains.

How did Checkout.com come about, and what does it seek to do?

Our founder and CEO, Guillaume Pousaz, created the company because he believes that complexity is a barrier to global economic prosperity. Payments is at the heart of this and has been traditionally a very complex industry with many legacy layers and large cumbersome players who were not necessarily offering the best value to users and perhaps lacked the agility to see through the sorts of visions which would become increasingly important. Guillaume built Checkout.com to reduce complexity in the system and to democratize access to payments – with all the many ensuing benefits that would bring.

How has the world of retail changed in the last 10 years? And how has it changed in the last 18 months?

Ten years ago, the economy was just emerging from a major economic crisis. I think 10 years on, there is an interesting echo — history never repeats but rhymes — as we emerge from another major global crisis and can again look at the remarkable resilience of the sector. Of course, the fundamentals of today’s crisis are very different and they have uniquely facilitated a turbocharged shift to digital and to ecommerce. You could say that digital has, this time, been absolutely at the core of the sector’s resilience and recovery. But even looking back to 10 years ago, digital and ecommerce were already really hot topics for the industry and were viewed as key growth areas.

In 2011, Cyber Monday sales amounted to $1.25 billion, which at the time was the all-time record. In comparison, analytics from Adobe show that in 2020 Cyber Monday brought in $10.8 billion in online spending in the US. In 2011 in China, consumers spent 2.5 hours per day online. This figure now stands at 5.5 hours per day.

In countries such as India, Pakistan and much of MENA, retail merchants were innovating with cash on delivery as a means of enabling ecommerce in cash-centric societies. Today our own research at Checkout.com shows that cash on delivery is on the decline in these regions with 80% reduction in cash use since the start of the pandemic, and 13 million people in Pakistan alone have shifted from preferring cash on delivery to now preferring a digital payment in the last 12 months.

One thing we have been looking at carefully is the degree to which the changes of the past 18 months will stick. From a consumer perspective we saw that in 2019 around 60% of Europe’s population had shopped online and by 2021 more than 90% had done so — of whom 73% said they had no intention of significantly reducing their online shopping as vaccines are rolled out and stay-at-home orders are lifted. In the past 18 months our data shows that retailers have not only been investing hugely in their online presence but also in cross-border capabilities — from payments to shipping and fulfilment. These sorts of investments are really interesting because they change the course for the near future quite rapidly and radically.

How much more important has the role of payments become not just as a way to broker transactions, but as a customer retention process?

Payments have always been important for customer retention (the experience of handing over money for goods is important to consumers and needs to be easy, enjoyable and completely trustworthy), but what has happened is that some key players have truly recognized and embraced this fact, have thrown brains and resources into it and have utterly upped the game for everybody else.

Our own research with Oxford Economics shows that consumers in Europe, the U.K. and the U.S. are all willing to pay more for products when they are rewarded by the ease and speed of one-click payments. We are also seeing an increasing number of merchants moving toward, and nudging their customers toward, subscription models — and why wouldn’t you?

In what way does Checkout.com help that happen?

Checkout.com is a technology company. We are first and foremost an army of engineers who are constantly building new solutions. It is one of our fundamental principles that we have always built for our merchants — taking real use cases and working to solve real challenges, taking into account the unique nature of every business we serve. For us it’s really about flexing to the customer rather than imposing rigid vendor lock-in.

Why do only certain payments providers give businesses full access to payments data?

Most PSPs simply are not built to create the level of transparency which our tech provides. We have consciously worked toward building a tech stack with data at its core, and that takes work. Not only this, but the simplicity of our single API makes the data accessible and easy to integrate into our merchant businesses. So it’s not a case of other providers being secretive with data, but simply that we have made the ability to see this data a priority because we believe it’s the real key to unlocking even better performance.

What kind of companies does Checkout.com work with, and how has it helped their performance?

We serve companies that make or take payments online. We serve the best organizations that are looking to scale their business – such as Farfetch, Deliveroo and The Hut Group. We do this by providing flexible payment solutions so they can adapt to their business needs. We also provide access to data and actionable insights with a dedicated local team of experts that partner to help unlock more value from their payments and capture more revenue at every transaction. For customers such as Wise, using Checkout.com has allowed them to increase their turnover by several millions of dollars every month.

Which data points should businesses be looking out for, and how do they diagnose declines to unlock better performance?

There are two crucial data points. Authorization rates — these tell businesses how many payments are authorized — and response codes — these tell businesses why their payments are or aren’t authorized.

Most businesses will track their top-line authorization rate — sometimes also referred to as an approval rate. It shows how many payments are authorized successfully once payment is initiated at the checkout. And it’s a vital metric for organizations to monitor because its rise and fall directly impacts revenue.

Authorization rates also provide an indication of the experience a customer is having. A surprisingly low authorization rate may indicate that legitimate customers are having payments wrongly rejected. This is what’s known as a false decline. And they cost businesses billions of dollars every year in lost revenue, making them one of the most expensive mistakes a business can make.

Although the top-line authorization rate is a good number to measure performance holistically, it’s not an especially useful data point for spotting trends and patterns that can drive actionable performance improvements.

On response codes, there are many reasons that cause a payment to fail. And response codes are what tell businesses the reasons why. These are generated every time a transaction is approved or rejected by an issuing bank.

Response codes are extremely powerful data points to have access to. Without them, it’s near impossible to understand why some payments are failing and take immediate action. This often leads businesses to make mistakes such as failing to retry the payment quickly enough or retrying too often and creating additional issues and costs.

Yet, unfortunately, many businesses are working in the dark. Our research finds 65% don’t receive detailed raw response codes on failed payments.

Learn More

Download Checkout.com’s guide to uncover how to improve your authorization rates through granular data and the right payments partner.

If you’ve been listening to enterprise software vendors over the last two years, the shift to hybrid work is inevitable and only they hold the tools to make it successful. But in reality, customers are still all over the place when it comes to hybrid work solutions.

Marc Benioff, who spent $27.7 billion on Slack last year and also owns one of the most expensive pieces of corporate property in San Francisco, declared that Salesforce’s “digital headquarters are more important than our physical headquarters.” Meanwhile, Satya Nadella insisted that hybrid work is the “biggest shift to the way we work in a generation,” right before touting the latest updates to Teams and Microsoft 365.

The stories are abundant. Thanks to the pandemic, businesses had to instantly grapple with the stark reality that it would be months, and likely longer, before their employees would again work together side by side in a physical building. Suddenly, the most valuable real estate in business became the 14 to 16 inches between the casing of a laptop.

“We truly want our team members to be able to work from anywhere,” said Rock Central senior director of engineering Andy Picmann. “Whether it’s on your laptop in the office, or from home, or having similar features and functionalities right on your mobile device as well.”

Companies rushed to adopt new tools or expand the use of existing systems — many that, prior to the pandemic, were viewed as “nice-to-haves” but not critical tech — to help connect employees who were not only now widely geographically dispersed, but also working under vastly different conditions. While some workers flourished, others suffered.

The phenomenon sent enterprise tech into a frenzy. Every provider worth its salt immediately began marketing its software as magic, providing new levels of productivity and collaboration that would solve any disparity caused by the pandemic.

Businesses appeared to buy the pitch. Industry giants like Microsoft saw their sales boom, while startups like Notion scored tens to hundreds of millions of dollars in new investments. The shift was so profound that vendors like Salesforce and Adobe spent billions to reap the benefits of the sudden surge of interest in collaboration and productivity software. Overall, while this demand created some problems, like insane sticker-shock, the stampede in adoption may have helped support increased output at some of the largest corporations.

“Our pandemic plan told us to expect a 40% reduction in productivity. And the reality is, across most of our business lines … we saw an increase in productivity,” said Nationwide Chief Technology Officer Jim Fowler. But if Microsoft Teams “is down more than a minute or two, work comes to a grinding halt.”

Suddenly, the most valuable real estate in business became the 14 to 16 inches between the casing of a laptop.

And now, the maturing needs of end users has tempered 2020’s sugar high and early leaders are emerging in a sector that’s expected to reach $26 billion by 2027. As hybrid work becomes more common — if not exactly mainstream — enterprise software buyers have become much more discerning.

Organizations like American Express, Nationwide, Ford and Capital One better understand which applications will be needed to empower employees to work across the virtual and real worlds, which ones have been overhyped and where gaps exist in the marketplace — a shift that could have a profound impact on the future of the collaboration and productivity software market.

It’s starting to have an effect on enterprise software vendors. Zoom, for example, faces an existential crisis over what role it will play as some workers return to the office. That uncertainty has underscored a 23% decline in its share price over the last year.

Meanwhile, shares for Microsoft, which has a growing stranglehold over the market, have risen roughly 60% in the same time frame. Other smaller, but growing vendors like Atlassian and Asana have also seen huge sales gains that drove up their stock.

While the market is still booming, there are questions of whether the future touted by Salesforce, Microsoft and others is even going to be a reality — at least, to the extent advertised. The amount of workers operating remotely full-time decreased from 54% in May 2020 to 25% in September 2021, per Gallup, while the portion of individuals that went into the office occasionally grew from 15% to 20%.

‘Equity in collaboration’

Prior to the pandemic, tools like videoconferencing, virtual whiteboards, online document management and instant messaging were becoming more prominent, as many enterprises were already introducing more flexible work policies.

But all collaboration tools saw a significant rise in adoption in the last two years and are now fierce battlegrounds in the world of enterprise software, pitting players like DocuSign, Miro and Figma against giants like Microsoft and Adobe, which bought Workfront in November 2020 for $1.5 billion.

“Everybody has access to web-based videoconferencing [and] group chat with history. Anybody who needs access to a smart whiteboard has it. Almost everyone has access to cloud-based document storage,” said Brian Saluzzo, the executive vice president of global infrastructure and digital workplace at American Express.

As the world of work grows more complicated, however, companies are also uncovering new problems that threaten to undermine the benefits of the evolving hybrid or fully-remote policies.

Increasingly, meetings are split between those in the office, those dialing in from home and workers who may be on the move — whether that’s in the car on the way to pick up the kids or in an airport getting ready to board a flight. That’s creating a need for more sophisticated videoconferencing capabilities to bridge the conversation divide between the real and virtual worlds, as well as tools that help organizers know where everyone will be located.

The dispersed workforce also means employees are using a larger array of hardware. An individual might use just their iPad when working out of a coffee shop or while traveling and a laptop when back at their desk. So employees need to be able to access documents across all those devices and share them within the enterprise.

Notably, while investors fear slowing sales in the future, DocuSign just posted 50% year-over-year revenue growth as it builds out a suite of products to tackle that challenge. Meanwhile, revenue last quarter at Box, which is facing a formidable challenge in trying to expand deeper into DocuSign’s world, rose just 10% to $202.4 million. While that may be solid growth for other sectors, that’s not the case in the world of enterprise tech.

The maturing needs of end users has tempered 2020’s sugar high and early leaders are emerging in a sector that’s expected to reach $26 billion by 2027.

Even physical offices are getting a revamp to incorporate tech that better supports hybrid work. Deutsche Bank was already in the process of moving to a new office when the pandemic hit, and took the time to outfit the building with upgraded equipment. Now, each office can switch between a private room and a conference room, complete with a giant screen and wide-angle camera designed to help remote employees feel as if they’re in the room.

It’s all part of an effort by corporate technologists to make sure all employees have an equal chance to succeed in the new world of work — or what Maru Flores, Ford’s global collaboration and productivity services manager, called “equity in collaboration.”

The goal is to level “the playing field of both remote and onsite participants to create, contribute, add whatever that is on an equal ground — which is a change now from totally being remote,” she said.

New possibilities, new challenges

At some businesses, it’s no longer expected that all employees stay online during designated hours.

Organizations are giving workers more flexibility to work when it’s most convenient, like after a child goes to bed at night. And while some businesses are implementing a four-day workweek, others say employees want to elongate it to seven days, offering up the option to hunker down on Outlook on Saturday while waiting for friends to come over in exchange for leaving earlier during the week.

Those shifts are ultimately helping to craft a more thoughtful approach to the software stack. A tool like Slack, for example, gives workers the ability to get caught up on messages at their own speed — whether in real time or by spending 30 minutes in the evening backtracking through the day’s conversations. Some workplaces have even prioritized asynchronous communication over traditional methods like email, while others see the two continuing to co-exist.

But there are gaps that organizations are waiting eagerly for vendors to fill.

At AmEx, Saluzzo wants software that can help remote employees navigate a complicated organizational structure to more quickly find in-house experts on specific topics. For Ford’s Flores, it’s a videoconferencing platform that supports 360-degree views that can follow those walking around the physical room. And others are eagerly waiting for promising tech, like virtual reality, to improve.

VR “is really going to revolutionize a lot of how we collaborate within enterprises,” said Flores. But “the technology is still not mature enough.”

Avoiding a single software ecosystem

In some cases, however, the benefits provided by the explosion of software are partially undermined by the added challenges imposed on internal tech teams.

After democratizing the ability for leaders to buy the tools that worked best for their teams, for example, some are now clamping down on so-called “shadow IT” in an effort to better connect a highly fragmented suite of applications across the enterprise.

While software vendors increasingly tout the ability of their systems to connect to others, many are still very far from being integrated right out of the box, and require engineering resources to manage. It’s a huge area of investment for organizations that increasingly want to share data across applications in an effort to inject automation and advanced analytics into the most common business tasks.

Picmann, for example, said the ultimate goal at Rock Central is to have all its tools in one spot. Microsoft is the primary IT vendor across all of Rocket Companies.

“A large piece of feedback that our team members provided to us years ago is ‘Well, we had a tool for this, and a tool for that, and I don’t remember what I should use,'” Picmann said. “So we said, ‘You know what, let’s take a look at the Microsoft product.’ And that’s the direction we went maybe five, six years ago.”

While the market is still booming, there are questions of whether the future touted by Salesforce, Microsoft and others is even going to be a reality.

It’s why the whole industry is rushing to build new partnerships with the most in-demand providers — even if that means working more closely with a fierce competitor. But in some cases, tech chiefs avoid going too deep into a single vendor’s ecosystem, deflating the ultimate goals of providers like Salesforce.

“Our goal is not to get to one,” said Nationwide’s Fowler.

IT leaders are also hesitant to invest too heavily in tools from startups that have yet to prove their systems can scale to the breadth needed to support organizations with potentially 50,000 or more employees.

For example, AmEx has a test lab outfitted with all the hardware and other tech a regular employee would use to do their job to run potential software deployments through the ringer. Rock Central, too, has a comprehensive vetting process using scorecards to evaluate multiple products at the same time.

So instead of rushing to deploy a tool that may be useless in a few years, customers are more comfortable waiting and working more closely with existing vendors to help plug holes in the product suites.

“Yes, the tool that you have today may not have the newest feature. But if you are willing to wait a little bit, it will get there,” said Fowler. “We’ve seen that between Zoom and Teams, there’s been leapfrogging that happens back and forth. But even the Microsoft Teams product doesn’t have all of the features we might get in Zoom, it’s good enough … and we know it will catch up.”

It’s more than just the software itself. The pivot to the virtual world has completely revised workplace cultures. But even seemingly basic changes to daily workflows can face internal resistance, according to IT leaders.

The move to cloud-based storage “was simple,” said Saluzzo. “The lift to teach the company how not to send attachments around was much bigger. But there isn’t one person in the company that can envision going back to what we were doing.”

Ultimately, the saving grace for many tech leaders navigating the challenge of outfitting their enterprise with the applications needed to support what is, in many cases, a dramatic shift in the way work gets done is tapping into a robust network of other IT professionals.

“The process is to have a tech strategy, know that is going to change, reach out and always stay outwardly focused,” said Capital One managing VP Maureen Jules-Perez. “Sharing is fun: You don’t feel like you’re on your own.”

On this episode of the Source Code podcast: It’s all Facebook, all the time! Issie Lapowsky joins the show to talk about what’s in the Facebook Papers, and what it’s like trying to report on them and understand how Facebook works. Then, Janko Roettgers discusses the company’s big rebranding — Facebook out, Meta in — and Mark Zuckerberg’s big-picture plans for the metaverse.

For more on the topics in this episode:

On either side of the Pacific Ocean, tech companies seem to have an obsession with the sky. While Elon Musk is launching rockets to space, Chinese electric vehicle company XPeng — a prominent domestic challenger to Tesla — is aiming for a lower altitude. On Oct. 24, it released a new product: a flying car that it says will enter mass production in 2024.

With two big propellers and a sci-fi design, XPeng’s new product resembles a cross between a drone, a helicopter and an electric car. Suddenly, everyone in China is talking about flying cars, or Vertical Take-off and Landing (VTOL) aircraft, as they are more formally known. Above everything, people are asking whether the promise of rolling them out in 2024 is realistic or over-optimistic. So far, it looks like the pessimists are more likely right.

2021 has seen China’s VTOL industry, especially new “eVTOL” models powered by electricity, growing steadily. Startups born this year are raising millions of dollars in seed funding while those with a few more years have received up to $500 million. But despite interest in the capital markets, there are many obstacles before an eVTOL product can make it into the skies.

In particular, eVTOLs are regulated as aircraft, meaning they need to undergo a different set of safety tests than cars. With the only VTOL-specific standards in the world proposed recently in Europe, no one knows how long the regulatory approval process in China could take. Observers say companies like XPeng may have the advantage in attracting media and investor interest, but ultimately, they are being too optimistic about the aircraft industry and its regulators, both of which act at a more prudent but slower pace than their automotive counterparts.

The industry disruptor

Much like how EVs have posed a serious challenge to traditional cars, eVTOLS are changing the industry of civil aviation.

“The number of parts in an eVTOL is about one-thirtieth the number of parts in a traditional civil aircraft,” Louis Liu, founder of aviation and maritime tech consulting firm DAP Technologies, told Protocol. “This is why eVTOL is the future. It’s less likely to break, its maintenance costs are low and it consumes electricity instead of gas.”

The low technological barriers and strong commercial potential have attracted startups with little civil aviation experience. EHang, China’s leading eVTOL company, listed on Nasdaq, started with consumer drone products. Zhao Deli was an amateur model-airplane fan before founding the company HT Aero, which was acquired by XPeng and developed the product released last week.

These firms represent a disruptive force in an industry that’s traditionally more prudent when designing new products. In any country, developing an aircraft needs to go through rigid processes of getting an airworthiness certificate. Currently in China, no such certificate has been given to any eVTOL companies; in fact, the criteria for handing out a certificate has not been updated to accommodate eVTOL technologies, meaning companies can’t apply for one even if they want to.

“Those outside [companies] unfamiliar with the aviation industry don’t act in the traditional way. They operate with an internet company mindset, which is rapid reiteration and trial and error,” said Liu. But their method may not work in the civil aviation industry, where safety concerns are taken more seriously than in the auto industry or drone industry.

A more realistic prediction

Around the world, eVTOL — and the futuristic urban air mobility solutions they could enable — remain an exciting prospect with no immediate results.

In a report released this year, Morgan Stanley walked back its optimistic predictions from two years ago and determined that exponential growth for eVTOL will only start “closer to 2040 or beyond.”

“As for the odds of [XPeng’s passenger aircraft] taking commercial flights in cities by 2024, I’m leaning towards a no. A serious amount of reliability and safety testing of all systems lies ahead,” said Daniel Shaposhnikov, partner at London-based VC Phystech Ventures, which focuses on deep-tech companies. Apart from China’s national regulators, he pointed to municipal regulators and even NIMBYists as factors likely to slow the pace to acceptance for urban air mobility products.

On a global scale, Shaposhnikov predicted the mass operation of air taxis (which is expected to be the real game-changer instead of private, hobby-use eVTOLs) to come in six to 10 years.

Liu is also not optimistic about the timeline that XPeng has laid out. It usually takes two or three years for regulators to come up with the requirements for getting an airworthiness certificate; only after getting this can companies design their products based on national standards. “To clear the whole process, you need four or five years,” Liu said.

The benefit of being future-forward

Realistic or not, this move may give XPeng supporters something to talk about for a while.

XPeng has entered a neck-and-neck race with Nio and Li Auto, two other Chinese EV startups native to the internet era which, like XPeng, also lack support from traditional automakers. Between April and October, all three of them have crossed the important threshold of 100,000 EVs produced. Remarkably, it took Tesla 12 years to reach the same milestone, twice the time it took these three.

Called the “three swordsmen” of Chinese domestic EV companies, they are often compared with one another. A recent survey of over 1,000 Chinese EV owners found that each company bested the other two in at least one category, from popularity to reputation to recommendation value.

To stand out in the race, XPeng may be betting on positioning itself as an aggressively forward-looking company. “EVTOL is one of the future disruptive moonshot technologies, so I think XPeng is trying to be at the forefront … to define the future of mobility/transportation,” Xing Lei, an auto industry analyst and former chief editor at the Beijing-based China Auto Review, told Protocol.

But of course, it depends on whether XPeng can keep its promise of delivering eVTOL products in 2024. Otherwise, it’s going to stay grounded for longer.