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PropTech Today: Is this the start of industry failure?

In last week’s column, I asked 14 industry leaders to give their predictions for the year ahead.

Well, it seems a handful of them have already been proven right as news breaks from Goodlord that it is letting 40 members of staff go. 

Could this be the start of a flurry? Could Goodlord be the first of many? If so, I don’t see it all as bad news. 

Richard Kennedy; Curren McKay; Sohail Rashid and probably a couple of others too; congratulations on calling it correctly. 

The prediction that 2018 would be the year that sees collaboration and consolidation really pick up speed has been swiftly proven correct with the regretful news that Goodlord is having to lose 40 members of its team. 

Goodlord, which has raised around £10 million in investments up to now, claims that by losing 28% of the workforce, mostly from sales and marketing, it will be able to put ‘more focus on bringing out new features and automation functionality to the platform.’ 

While it’s by no means the end of the road for Goodlord, it is certainly an unwanted setback, regardless of how it might want to spin the news. I do question the motivation of concentrating on scaling when you are cutting back in sales and marketing. Isn’t that counterintuitive?

It doesn’t end here, though. I predict a slew of similar stories coming soon. There are already rumours abound that at least two or three companies are on the brink and, if anything, the Goodlord story proves that it matters not how well-funded you are, it’s still no guarantee that you’re going to enjoy uninterrupted success. 

Even if more stories do appear and more PropTech companies downsize or fold, I don’t see it entirely as a bad thing. 

That’s because 2018 needs to be the year that PropTech grows up. The year in which many learn that, in this industry, you can’t do it all on your own as a small company, shut off from the rest of the sector. It simply isn’t possible at this stage of PropTech’s maturation. 

Back to the Hype Cycle

PropTech Today: Is this the start of industry failure?

I have written about the PropTech Hype Cycle before, and it’s back again now to help me illustrate my point. I won’t go deep into the details again, but you can read up on it here.

PropTech is reaching the Peak of Inflated Expectations, a point in time where the demand for new technology and new ideas is booming. But the peak is always followed by the trough. 

In terms of PropTech, this trough is caused by oversaturation of the industry; too many companies vying for the same space.

This is exactly what has happened to Goodlord; it has slipped into the trough. Now it’s time to consider its position, question its philosophies and realign its goals. Most importantly, it needs to find out why it didn’t manage to avoid the trough. 

It is my belief that the only way of avoiding the trough is to ride the Collaboration Curve all the way to the Plateau of Productivity.

By consolidating the market through collaboration and mergers, rather than slump, companies can glide along the much more gentle curve and the trough can be avoided altogether. But this requires businesses to be open minded to the idea of working with those currently seen as rivals, a concept which many leaders still struggle with. 

One example of a company doing it right is Kykloud’s recent merger with American software giant, Accruent. The two companies carry out very similar jobs on either side of the Atlantic and so it’s great to see Kykloud taking advantage of this opportunity to strengthen its position and increase its presence. 

Kykloud collaborated, Goodlord did not. The outcome of each is clear to see. 

The silver lining

My reason for not viewing more potential closures as an entirely bad thing is because I believe it to be a necessary cull. The market is shedding itself of dead weight, the weak are making way for the strong. 

We have been calling out for this consolidation for a long time. If losing the companies who aren’t forward thinking enough to succeed is one way to get there, that’s fine by me. 

It’s always heartbreaking to see good companies suffer major setbacks, especially those which result in job losses. But it’s an essential stage of evolution that is long overdue and I for one am glad it’s finally arrived. 

I do, of course, wish the guys at Goodlord all the best with the inevitable realignment they’ll be going through right now. By no means have we seen the last of them yet.

*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.

  • Simon Shinerock

    We tried Goodlord early on without success, I’m sure it’s better now. Distribution and sales is just as important as the product itself. We all know the VHS Betamax story. I agree, PropTech needs to grow up, consolidate and focus on delivering tangible results. Take a leaf out of Google’s book, their success comes from clear ROI measurability

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    Fundamentally I have an issue with "Prop Tech" as a bolt on to established independent estate agency businesses. Unless you are going to re-write the customer journey and use prop-tech to enable this then it's just bits stuck on, which you will break off when you need to save costs. The opportunity is for the big software providers (Reapit, Jupix etc) to provide more encompassing software that handles the whole customer journey and (crucially) is AUTOMATED. This is not the case currently, so for example if you want to acknowledge a website lead or live chat interaction at 10.00 pm at night, by sending the customer a text or email, perhaps with a video message then you have to build it yourself using proprietary CRM software, and that means you need a deep pockets for the platform build and the marketing/systems know-how to maintain and run it. Prop-tech is seen as helping the "small guy" compete with the "big guy" but I write the cheques, and I know that currently it's only the big guys who can afford the proper implementation.

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