With more news of PropTech investment, this time with Spotahome and Nested, one can’t help but wonder if this boom period is close to its peak.
With so many companies offering so many, sometimes subtly, different solutions and disruptions, are we heading straight into the ‘Trough of Disillusionment’?
I think there’s one way to ensure we’re not...
The ‘Hype Cycle’, originally conceived by information technology research company Gartner, is a visual representation of the maturity, adoption and social application of specific technologies.
It depicts the path that tech tends to take. From conception it rises to a Peak of Expectation, but then dramatically slumps to the Trough of Disillusionment. Then, it gradually rises along the Slope of Enlightenment to the Plateau of Productivity. Although the labelling is somewhat Tolkien-esque, it’s an incredibly useful graphic.
I would argue that PropTech has now reached the Peak of Expectation. Investment levels are soaring and more and more companies are arriving. But, as demonstrated by the two home-finding companies mentioned above, there are now a plethora of companies all competing for very similar corners of the market.
It is this dilution of the market, I believe, that is going to push PropTech off its peak and into the Trough. But while that is the expected trajectory, it shouldn’t be something that we’re simply resigned to. I’ve therefore made two additions to the Hype Cycle which represent an alternative path for PropTech. The Curve of Collaboration, and The Ego Void.
We end up in the trough because people are fed up with tech. Too much arrives too quickly and the market grows weary; disillusioned. As such, loads of great opportunities risk being missed because the market has been completely turned off.
But I think there is a way to bypass the Trough and go straight from the peak to the plateau, and that’s to have our moment of enlightenment before the trough, not afterwards.
It’s my opinion, for what it’s worth, that our enlightenment is collaboration.
Avoiding the Trough
We need to consider investments and subsequent valuations more carefully whilst thinking about strategic investment, and review growth by merger and acquisition activity; as I have written here before, we need to consolidate the market.
If we can do this, if we can ride the Curve of Collaboration, as I’m calling it, I believe we can avoid the Trough altogether.
To be blunt, if this industry does end up in the Trough, I think it’ll be the direct result of senior industry figures being too single-minded to open up their companies and products to the possibility of teamwork with another ‘rival’ company. Hence, I’m calling the shaded area of the graph, below the Curve of Collaboration, the Ego Void.
I have written before about the Founder's Ego Risk, the risk of CEOs and Founders arriving with much needed confidence, but then allowing funding and early success to turn that confidence into ego, before letting that ego turn to hubris. The risk is that they then perceive their own abilities as above and beyond anyone else’s.
Ego blocks our capacity to consider a product’s role in the success of the wider property industry. And when you think you’re better than everyone else, you’re unlikely to work in partnership with them.
While the Hype Cycle concept is tried and tested, I don’t think its path is inevitable. We can avoid the trough by checking ego at the door and looking for ways to enhance the solutions that we bring to the industry. By turning two companies into one, or at least building a bridge between the two, we give focus to creativity and clarity to the market.
If we stop the needless flooding of the industry, we can entirely avoid the Trough. But if we continue to dilute, we’re destined to dive through the Ego Void and end up firmly in the trough, ultimately holding the industry back until we realise our mistake and begin to put it right.