As Trussle and Placester add to 2017s bonkers tally of PropTech investment, isn’t it time we end the conflict between Tech and Tradition?
PropTech is so hot right now that, if I’m not careful, my guest coulmns with EAT could be grouped and given the subheading of James Dearsley: Investment News.
Every week, I seem to be writing about PropTech companies raising vast amounts of funding, and guess what...it’s happened again.
Trussle raised £4.5m back in Feb, and now US company, Placester, the all-in-one marketing toolkit for real estate professionals, has raised a whopping $50m in Series D funding.
Because I’ve written about funding so much recently, I’m not going to focus on this too much.
However, it does offer convenient context for what I really want to talk about this week: the ongoing feud between PropTech and traditional real estate. (For the purpose of convenience, I shall henceforth refer to them as traditionalists.
This PropTech boom doesn’t come as a surprise to anyone simply because this is the way of today’s and tomorrow’s world. By ‘this’ I mean two things.
One, technology rules all and two, people’s needs are rapidly changing. We are seeing an ever-increasing proportion of the population becoming what the experts have labelled as ‘transient’. In other words, they’re moving around more freely and more often and demand that their housing situation fit conveniently around this lifestyle.
This has delivered an enormous demand for innovation and automation, and the success of early birds like Zoopla provided the blossoming industry with an irrefutable mandate. And just like the demand for world travel opened the investment floodgates for the early days of the air travel, the demand for more flexible living is driving investor attraction towards PropTech.
But we are fast approaching the breaking point that’s been a long time coming, and an important treaty now needs to met.
Ask not what property can do for you…
The conflict stems from one simple truth: the people who are identifying and rectifying shortcomings in the traditional property market do not come from a property background. Time and time again, I meet PropTech CEOs with the same story of origin: they were all founded by people who grew tired of the inefficiencies they experienced as customers and dreamt up disruptive solutions.
James Jenkins-Yates was an Airbnb host who struggled to juggle his hosting duties and his dayjob.
Julian Doorten from StorageShare didn’t have anywhere to store his skis.
Adam and David Hyde from KeepSite worked in construction and tired of the industry’s lack of standardisation.
The breaking point we have reached is between these entrepreneurs and the traditional professionals whose market they are disrupting and it’s all because the flaws and the solutions are arriving from separate directions
On one hand, the relationship between the two is improving every day, but on the other, the situation is getting worse. One of the contradictions is due to the pace at which the market and its demand are moving.
When approached by budding PropTech startups, some Traditionalists are taking too long to make decisions. And the entrepreneurs, by their very mindset, get tired of waiting - not that I necessarily support this behaviour, though I understand it as they have several irons in the fire to growing ‘their baby’ and speed is of essence as they are ‘bootstrapping’ in a major way. As a result, they look to alternative routes to market.
Lessons learnt from eMoov
I’m going to place the burden of backing up my claims on this detailed article from Mike Delprete, in which he discusses, in remarkable depth, the lessons that the traditionalists should take from eMoov and its business model.
I strongly recommend taking 10 minutes to read the article in full but, for the purposes of this column, I’m only going to focus on the part that I think most simply illustrates my point.
Some traditionalists still think that the world of PropTech is one to fear and that it may eventually render them redundant. This is a grave misunderstanding. As Rentr’s Adam Blaxter puts it in another excellent article this week: ‘we should be working together to focus on the consumer to make them happy users of the services we supply…so I feel it’s time to speak out.’
eMoov are the perfect subject for a case study on this conflict because, being an online estate agent (OEA), they are creating the most noise as the new breed of PropTech company that could threaten futures. Traditionalists may fear OEAs as a direct competitor, fearing that they are hacking into their customer base.
But any hard feelings could be wasted time. The ability to cut time and cost is all thanks to technology, there’s no two ways around it. But, as Delprete says, ‘The winning formula is technology + people. You need both to succeed.’
And this, I believe, is the secret to reaching our treaty. PropTech has the technology, and the Traditionalists have the people. If you only have one, you may well reach high levels of success, but if you have both, working in harmony, you can reach higher.
Traditional agents should look to the automation of many parts of eMoov’s operation; especially in booking viewings and feedback mechanisms. During my time as a negotiator, and then manager, at Foxtons, these two jobs were some of the most frustrating and time consuming. I was left with the uneasy sense that I was letting down my vendors and landlords through inefficient use of time.
To overcome this, offering an ‘always on, always visible’ approach to feedback is instrumental to communication and therefore success.
At the same time, having user centric means of feedback makes price drops and other tricky discussions far easier and more visible to the client and do not become about the agent’s opinion or personality but rather the transparent feedback of the crowd.
Power to the people
For the Traditionalists, technology doesn’t only remove the never ending admin element of their job, but in doing so it also gives them more free time to do what they do best; sell.
The People, the second half of Delprete’s success algorithm, are largely missing from the PropTech experience. ‘Success comes from more than technology and user interface; it’s the team, the methodology, and an ethos of continuous improvement.’
As I’m often saying in talks or presentations: ‘sales and revenue generation are about human interaction: always have been and always will. The only thing that has changed is the way in which that initial human interaction comes about.’
Rentr’s Adam Blaxter says: ‘In the service economy, companies like Rentr have an important role, one that has been lost whilst everyone scampers for a scrap of funding here or an “anti-agent headline” there. We should work hard, together, to provide a modern, end user focused ecosystem.’
If traditionalists can embrace and implement tech to cover much of their workload and increase customer experience, then they are free to use their truly irreplaceable skills to negotiate, inform, advise and sell.
We all need to follow Blaxter’s lead and speak out, because if traditionalists can be faster to act upon potential partnerships with their PropTech counterparts, the gap between the two worlds will eventually close and we can finally offer the consumer the best possible service.
The two worlds are currently pre-teens at the school disco, nervously and suspiciously sticking to their gender on opposite sides of the assembly hall. One can only hope that as they reach their teenage years, we’ll be struggling to keep them off each other - I have seen a few that have started to kiss behind the bike sheds (but too few so far).
As always, there are still important lessons to be learned. Times are changing, the industry is evolving and we owe it to ourselves, let alone our businesses, and most importantly, our clients or prospective clients, to work with the each other rather than against.