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James Dearsley: The teenage angst of PropTech and traditionalists

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. 

*James Dearsley is founder of the Digital Marketing Bureau and a PropTech communicator. To sign up to James’ Sunday PropTech Review, click here.

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    Seems weird that eMoov would be used as the barometer of success...surely Purplebricks are the agent with the most relative success?

    James Dearsley

    Correct T Dap - on this occasion it wasn't the success but rather the fact they had been through 3 upgrades on their software. That makes it a far more interesting discussion and comparison. Hope that helps

     
  • Kristjan Byfield

    James, as usual, bang on the money. OEAs are not (generally) a threat to agents- if you can justify/demonstrate how the human element of your business delivers a different service to digital-only. That said, the genera marketing message of certain agents needs to be adjusted to be so 'anti industry' and I am still staggered at the lack of action in THIS regard by the likes of NAEA.
    However, I firmly beleive it is traditionalists that are killing their own business. Our agency is full service, yet we have adopted loads of PropTech to streamline & automate the inner workings. To date, we have/are using: jupix, propertyfile, move it, eyespy360, movebubble, docusign, ValPal and many more. The result? We are freed up to focus on the consumer experience. And yes, I do bloody well mean the consumer. Whilst we have clients, our focus on service for all should be paramount to every full-service agent out there.
    By embracing tech, yet remaining a small independent team with (currently just 5 staff) we keep winning awards, get amazing (and genuine) reviews, should get close to 700k turnover this year (on target to hit our 1m target by 2020) and we operate at nearly 50% profit. Literally a win all round.
    It was interesting talking to so many agents at the ARLA event yesterday, still an overwhleming divide between tech savvy & tech cautious agents. I find it mind-boggling when I meet senior agency staff who respond with 'it worked for the last 10 years so why change it'. Whilst independents are far more dynamic and can adapt and test solutions quickly, too many are far too slow to do so. Meanwhile, although the adoption process is much slower, the larger agents appear far more aware of the benefits of tech and are not only doing so but are actively seeking out the next thing round the corner.
    I would love to know the correlation between the tech-cautious agents and those that are constantly bemoaning sliding fees, OEA threat, etc. Im guessing this will be rather strong.
    Tech, like electronics, has become so reasonable and affordable that there is little excuse for agents NOT to try things. However, when doing so, agents need to fully commit to the transition- which will involve embedding new procedures, retraining staff and regualr checks to review adopton, feedback & performance.

    James Dearsley

    Thanks Kristjan. In part we have an issue of inertia. As more gets used I suspect this will reduce BUT I also see this as a generational step change as more and more move to technological change. Won't be immediate though.

     
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