Z Venture Capital (ZVC) has made an investment in TERASS Inc. (TERASS), which operates a support platform for independent real estate agents.

This time, we held a discussion between Ryosuke Eguchi, President and CEO of TERASS, and Chihiro Kameoka, Principal at ZVC who led this round.

Through the discussion, Mr. Eguchi shared his formative experiences that led to founding the company, the reasons for pivoting to a platform business model, the vision for collaboration with LY Corporation, and regarding hiring, the talent they are currently seeking and the unique culture called "Barbarianism."

【TERASS】

With the mission "Good real estate transactions start with good agents," TERASS has built a platform that enables "anyone to start a real estate brokerage business today as an individual." Centered around the core system "Terass Cloud," they support agents with proprietary technology including customer acquisition (Terass Offer), customer communication (Terass Portal), and property recommendations (Terass Picks). Agents can conduct brokerage operations fully remotely, reducing average working hours by over 70% while significantly increasing the number of transactions and compensation.

▶︎Official website:https://terass.com/

Participant Profiles

TERASS Inc.　President and CEO　Ryosuke Eguchi

Graduated from Keio University Faculty of Economics. Joined Recruit in 2012. Spent 5 years in SUUMO advertising sales and web planning for the used housing sales sector. Joined McKinsey & Company in 2017. Gained experience in management consulting centered on M&A. Founded TERASS, a next-generation real estate agent firm, in April 2019. Selected for Forbes Japan 100 2022 "Face of the Year" for his innovative approach to the real estate industry. Appointed as a board member of the Real Estate Tech Association in 2023.

Z Venture Capital　Principal　Chihiro Kameoka

Chihiro Joined Z Venture Capital in January 2023. Prior to Z Venture Capital, Chihiro worked at Nishimura ＆ Asahi law firm before joining YCP (consulting and investment business). At Nishimura ＆ Asahi, Chihiro worked on M&A and corporate matters as a corporate lawyer, and at YCP, he provided consulting services to companies in various phases of business creation, strategy development, management improvement, etc. Chihiro was also involved in the investment review, execution, and value-up of investments in the company's investment division. Chihiro graduated from Waseda University School of Law and completed his graduate studies at the Waseda university's Graduate School of Law.

The Founding Experience—"The Gap I Felt When Buying a Home Was the Starting Point"

Kameoka: Let's start with your founding story.

Eguchi: Previously, I was involved in the real estate industry as a sales and planning person at Recruit's SUUMO, and I purchased a condominium at age 26. The experience itself was very positive. When your living environment changes, your outlook on life changes too, and there are benefits in terms of asset building.

Through that process, I realized the enormous impact that housing itself has on people's lives. On the other hand, I was surprised by how much unnecessary work real estate companies were doing.

For example, regarding the contract documents, the person in charge contacted me saying, "I forgot to have you stamp one place, so can I come over now?" and when I looked at the clock, I thought, "Wait, it's 11 PM—you're coming now?"

Kameoka: That's tough for both parties.

Eguchi: As these things accumulated, I felt a disconnect between providing the wonderful experience of buying a home on one hand, and the inefficient way of working for the people facilitating that transaction. That was my initial formative experience.

From there, when I actually thought about what I should do, based on my own experience and also referencing models that had already gained traction in America, I thought we should deploy a business model in Japan that eliminates these inefficiencies, and that's why I founded the company.

Kameoka: I think many people can relate to the inefficient aspects of purchasing real estate. When I bought my own home, I had thoughts like "This document looks like it was made from scratch—isn't there a template?" and contracts were sent from the brokerage company late at night, conveying how hard they were working... and then there was "We can't do electronic contracts, so please go buy revenue stamps."

Eguchi: Exactly. The desire to improve these issues led to starting the business.

Kameoka: I'm sure there were various options, but what led you to arrive at a platform for independent agents?

Eguchi: Initially, I was thinking about "Vertical SaaS for real estate companies."

However, what I realized was that "just making real estate companies a little more comfortable doesn't change people's lives."

The real estate industry is fragmented, and overall, IT adoption tends to be slow. Additionally, they're extremely averse to increasing fixed costs. For example, they'll hesitate over even ¥20,000 per month for e-signature SaaS. But they'll still go on company trips (laughs). It's the psychology of only spending money when there's a big revenue spike.

Rather than forcing a monthly subscription SaaS into such an industry, I thought it would be faster for us to become a tech-armed real estate group ourselves.

Bringing a fresh wind to real estate brokerage | 【Official】TERASS

Kameoka: Why did you focus on "brokerage" as your market entry point?

Eguchi: The real estate business is broadly divided into two categories:

・Developers who build and sell properties

・Brokerage and services such as sales and management

Those are the two main categories.

Brokerage is a service business, so in theory, "you can do it if you have the skills." I think the image is similar to how the salon industry is becoming freelance-based. Therefore, service businesses tend to become more individualized.

That's why I thought if we create a "platform where skilled agents can thrive as independent individuals" and combine it with technology, it would accelerate progress across the entire industry.

Kameoka: This is a very attractive model from an investor's perspective as well. Vertical SaaS alone tends to have a limited TAM (Total Addressable Market), but TERASS's business model can grow in connection with the GMV (Gross Merchandise Value) of real estate brokerage.

The market scale is on a completely different level, and you can solve problems that can't be addressed with IT tools alone by touching the actual business yourselves. I feel this is a model that can continue to grow the business even after IPO.

Eguchi: Thank you.

The Platform—Independent Agents × Technology

Kameoka: Next, please tell us about the backend of the platform that supports TERASS's services.

Eguchi: Right. The current core is "Terass Cloud," a core system within the agent business support platform, and the key feature is that "you can start real estate brokerage operations from today" without printing documents and without coming to the office.

We've connected various products to that based on specific purposes.

・Terass Offer: A matching platform for customers and agents

・Terass Portal: When accepting property listings for sale, it visualizes inquiry and response status in real-time for sellers, eliminating "pocketing"

・Terass Picks: Leveraging AI and other technologies to quickly propose properties suited to customers

The key point is that we comprehensively support agents' operations from case management to customer acquisition, proposals, and closing by integrating each product.

(From the Terass Offer introduction site)

Kameoka: To what extent has implementation led to operational efficiency?

Eguchi: Taking working hours as an example, 63% of agents who joined TERASS were "working over 8 hours per day" at their previous jobs, but after joining us, that dropped to 8%. Almost everyone has been able to reduce their working hours.

On top of that, 86% answered that they are "providing more value to customers than at their previous job." Given that they're reducing working hours while agents themselves feel their own value, we feel we're providing something good.

Kameoka: As we considered making an investment, we interviewed agents, and they said, "Travel and operational burdens have decreased, allowing me to fully commit to customer proposals." Ancillary tasks are reduced, the number of closed deals naturally increases, and income goes up. The quality of work is changing, isn't it?

Eguchi: I really think we're creating a positive cycle. Regarding annual income as well, over half of full-time agents have annual incomes of over ¥10 million, and we have agents earning over ¥50 million or even ¥100 million per year.

Kameoka: In Japan, companies centered around agents are rare to begin with. Why has this become possible now?

Eguchi: There are two main factors.

・Reduction of information asymmetry

Previously, there was a lot of information that only major companies could access, but that gradually broke down, information became open, and a level playing field was established where individual agents could compete.

・Regulatory relaxation

Following a notification from the Ministry of Land, Infrastructure, Transport and Tourism in 2020, the "obligation for full-time licensed real estate agents to be stationed" was officially relaxed on July 1, 2021. This made it possible to work without being tied to an office, making our model realistic.

Those are what I would cite.

Kameoka: How has the response been from the industry?

Eguchi: We often get surprised reactions like "I can't believe you built this." Given that we're operating over 750 agents with a team of about 100 people, we get asked "How does this work?" (laughs).

The background is that based on fundraising, we built our own system without hesitating to make upfront investments.

Kameoka: Earlier you mentioned "How are you operating with about 100 people?"—please tell us about the characteristics of your current team.

Eguchi: Basically, we have a policy of "only hiring professionals," so we operate with the concept of having everyone work with passion as a professional group.

So we might be on the older side for a startup. I'm about in the middle overall. I'm the youngest among the executives. On top of that, our characteristics include:

・Complete freedom of where/when to work = a way of working where each person can deliver maximum performance

・Positions = a select group handling specialized domains

・Internal keyword is "Barbarianism (be a warrior race)"

In other words, it's a culture of having "overwhelming ownership," trying quickly, failing quickly, and learning quickly.

In hiring interviews, we assess whether someone has "Barumi (Barbarian qualities)"

(Photo of TERASS members: The twice-yearly "Offsite" is a major event where all employees gather in person to have a great time!)

Kameoka: The people at TERASS are extremely talented, so I think they will continue to grow even further with barbarianship as their strength. Just as alumni of certain companies are often referred to as "something mafia," it seems like the terms "TERASS Mafia" and "barbarianship" will spread widely.

Eguchi: Actually, I'm currently writing a business book about these ideas with a publisher. Everyone, please look forward to it.

ZVC and TERASS's Vision—The "GMV-Linked Model" and Collaboration Plans with LINE Yahoo Group

Eguchi: I also have a question for you, Kameoka-san. What were the key factors that led ZVC to decide to invest in TERASS?

Kameoka: There are two main reasons.

The first is that I felt this business model was exceptionally strong, especially as the challenges that can be solved by IT alone are becoming more niche.

I thought the model of advancing DX in-house and taking a revenue share on GMV was excellent.

The second is that I felt house hunting and real estate searching are very well-aligned with modern trends, and I sensed that this tendency will only strengthen going forward.

As the real estate market seemed likely to expand further with used condominium transactions, I strongly felt that trustworthy brokerage and business DX would become even more necessary.

Eguchi: I see.

Kameoka: From personal experience, "buying real estate" is a major decision, so I felt it's difficult to make that purchase decision without having a professional give you that final push.

I think having a trustworthy professional as a companion is necessary when purchasing real estate.

Also, there are so many documents involved in real estate transactions—application forms, contracts, and everything being exchanged on paper felt off to me. There's truly enormous room for DX. Considering all these factors comprehensively, TERASS is addressing each of these challenges, and from the perspective of being a "GMV-linked model rather than just an IT tool," I strongly felt it perfectly matches the times.

Also, when I spoke with people from Recruit, where you previously worked Eguchi-san, and with people in the real estate industry, the evaluation of you was very high, which led to our conviction that "ZVC absolutely wants to invest."

Eguchi: It makes me happy to hear you say that.

Kameoka: Now that I'm talking about it, I remembered that when I was looking for real estate, I watched TERASS's "Sumai Academy" on YouTube. Not only was the content great, but it had been regularly updated for a while, and I thought, "This shows real perseverance."

(Ryosuke Eguchi / TERASS Sumai Academy)

Eguchi: Thank you. I think I'm doing my best with this one (laughs).

Kameoka: It's truly amazing. There are times when I can tell you must be tired, yet you continue anyway.

Eguchi: Recently, I've been working on this because I think there are many people who want to gather information and gain knowledge through videos. It's difficult to read specialized content in articles. I want to deliver valuable information to people who are about to buy a home. With that mindset, I find it rewarding even when I'm busy.

Kameoka: Now from the ZVC side, I'd like to ask—what were your reasons for choosing ZVC as a partner?

Eguchi: There are two main reasons.

One is the business co-creation capability as a CVC. For pre-IPO startups, shareholders who seriously provide "capital + synergy" are valuable.

The other is the largest-scale ToC assets in Japan. LY encompasses a wide range of EC, finance, and media, and I think the compatibility with real estate is good.

Our challenge is the limited data we have. TERASS still has relatively few transaction data at around 500 cases per month, so LINE Yahoo's massive traffic is very attractive.

Since ZVC's investment was decided, discussions about collaboration with the LY Corporation Group have been progressing. Because we have a capital relationship, we can discuss areas that wouldn't normally be possible to explore with regular clients, and I'm thinking about creating "media that goes beyond advertising and directly connects to transactions" together.

Kameoka: I think there are truly various possibilities with LY, so I hope we can work together on this journey.

Hiring and Vision—Seeking Teammates to Achieve "Three No.1s" by 2027

Kameoka: Finally, with hiring in mind, could you tell us about your future business development and scale?

Eguchi: By 2027, we will definitely aim to achieve this triple crown: ① No.1 independent real estate brokerage, ② No.1 in number of agents, and ③ No.1 in number of real estate-related services that agents can provide.

In 2027, as a company in its 9th year since founding, we want to become number one in Japan. To achieve this, from both existing and new business perspectives, for example, there are housing loans. I believe one reason home buying is troublesome is because of housing loans. We want to integrate brokerage and loans into a seamless process, incorporating IT as we move forward.

Another area is real estate investment. At TERASS, 70% of transactions are for primary residences, and the remaining 30% are for investment properties. I think investment properties will also grow going forward. TERASS is currently preparing to launch a made-to-order condominium business that doesn't hold inventory. I think we can launch this within this year. This is what we can disclose at the moment. Beyond this, there are several other projects in progress. Honestly, I'm really enjoying this right now!

Kameoka: That's great. To move these plans forward, I imagine you'll need to expand the team—what specific teams or talent are you looking for?

Eguchi: We're hiring across all areas, but what's especially important is AI talent and product managers.

Since we're not just providing a single product, we need multiple product owners. They have significant decision-making authority, so we want to hire talented people and "entrust" them with dynamic products.

Regarding AI talent, the situation has really changed dramatically from just a year ago, and we're thinking about how to adapt our business to that—whether to incorporate it into existing business or to rethink from scratch what things "should be like in the modern era." The AI position is crucial in all this, and we've launched an AI team. I believe the success of this team will determine our future competitiveness.

Kameoka: Could you also share a message for hiring candidates?

Eguchi: I think real estate feels more or less familiar depending on your age, but for many people, it doesn't feel particularly close to them. However, everyone lives in a residence, and there will definitely come a time when they consider purchasing a home. And the thing people spend the most money on in their lives is housing.

On the other hand, despite being deeply connected to our lives, there are tremendous inefficiencies in this industry. I think the appeal of TERASS—being able to approach this market while having actual transaction data—is exceptional.

There are many agents who say "Coming to TERASS changed my life," and customers tell us "I'm so glad I worked with that agent"—our customer satisfaction rate is an overwhelmingly high 98%. This is proof that this is a business that can have a major impact on people's lives.

It's highly rewarding work where you can feel social significance. I believe we're building a business with tremendous social impact. If you want to work in this kind of environment, you'll definitely fit in at TERASS, so let's start with a casual interview.

Kameoka: Eguchi-san, thank you very much!

Recruitment information here：https://terass.com/recruit/