“Industry veteran Bob Scarff has described almost all PropTech companies as ‘solutions in search of problems that don’t exist’.”
Almost all! I went on to damn Bob for his big gob and ‘unhelpful outbursts’ and, unsurprisingly, he soon got in touch with me. He did so in order to point me towards his original article.
What Bob was actually suggesting is, might we now be at a stage in the evolution of PropTech where the potential for returns is starting to be broadly noticed, and more and more people are trying to get their share of the profit pie?
As such, might we now be seeing a lot of solutions coming to market for problems that don’t really exist?
And I would say yes; we are. I’m all up for encouraging the entrepreneurial spirit, excited to help people get their ideas off the ground, create their own vocations, but I’m also very aware of the dangers of having too much.
There is a risk that we are oversaturating the PropTech industry. I have spoken before about the danger of too many companies, claiming to do too many things, ultimately confusing the industry and its clients. This would weaken the industry, leaving it in a state of ultimate limbo, where too many bad ideas have created indifference towards good ones.
So, if we were to cut down on the number of companies, it would make sense to start by asking, what are the biggest property issues that need addressing? And it’s at that point in the conversation where you have to start questioning the need for some of the solutions that some startups are hoping we’ll all agree we need.
I’m going to give a quick example. I read recently about a new startup being labelled as a ‘PropTech bank’. The service currently on offer is an app that helps people save for their first mortgage. The user tells the app when they want to buy the house, and for how much, and the app then tells them how long it will take and offers advice on how to get there.
All very nice and good. But, my question is, when you want to save money for a house, do you not just go ahead and save money for a house? Do you need an app in order to do so?
More importantly, is the industry benefitting from the presence of such a solution, or is it just another name to be placed somewhere, uncomfortably, in between online mortgage brokers and credit score solutions?
So yes, I do think Bob makes a valid point about solutions in search of problems, but, in the wider context of property, I still think PropTech is doing a stellar job.
I would say that 90% of what’s being done is vital work. There’s no denying it, the proof is in the pudding: PropTech works. But to keep it that way, I think the industry must act with great caution and ask of every budding startup, on a macro-level, are you solving a real, vital issue? Because if not, and if you believe that oversaturation gets in the way of consolidation, there is a good chance that they will become an obstacle to wider industry success.
*James Dearsley is a partner in PropTech Consult, digital transformation specialists for the real estate sector. To sign up to James’ Sunday PropTech Review, click here.