I want to take the time this week to talk about PropTech startups and how they can often be seen to pivot away from their original business model towards something new, either in a nuanced or radical way.
Furthermore, I want to discuss why these pivots take place, and how estate agents can not only benefit from pivots by inspiring them, but also find value in pivoting their own business, too.
So first, let’s look at the why:
Investors in early-stage businesses are as much guided by their belief in the founder(s) as they are the business model.
The best and most successful investors understand that early-stage businesses are often working with early-stage ideas and innovations. As time passes, it often becomes clear that these original ideas or innovations are not what the market needs, are not going to carry the company to success.
Such instances, however, do not necessarily bring an end to the early-stage company.
Because of this, investors hope to identify those founders who they believe have the ability to learn, evolve, and grow, knowing full well that the business model will then evolve alongside them.
These founders have the ability to recognise when their original model has less potential than they first thought, and that an alternative approach towards the same target market has more potential for success. So they pivot.
Unissu’s own (sort of) pivot
As of the past few months, I, alongside my co-founder, Eddie Holmes, have become one of these pivoting founders as we came to realise that our original model for Unissu did not offer the best value to our prospective customer. We were giving value to an extent, but realised there was more to give to become an essential tool.
We worked out, pretty soon after launching, that sticking 7,000+ PropTech companies together in one easy-to-use platform didn’t actually help real estate companies successfully execute their digital transformations.
Faced with a barrage of companies, they remained lost as to what exactly each PropTech company is offering. The wood for the trees, as they say. We needed to find a way of solving this still existent pain point.
To illustrate: I read this article on Letting Agent Today last week about ‘AI’ company Roby.ai - it received, quite expectedly, some flack from letting agents who suggest that reducing admin work by 2.5 hours each week was not going to help them combat the changing environment they are now working in thanks largely to increased regulations and new paradigms of market competition.
I would be inclined to agree, but I’m also aware that automation, an increasingly popular by-product of AI, is going to dominate the future of real estate. There is no doubting this.
So, while agents are right to question whether Roby.ai’s offering is required at this time, they do still need to be investigating the potential for automating aspects of their business.
At Unissu, we originally thought that to do this, real estate simply needed to know where they could find a comprehensive list of AI providers, so we started Unissu. But there are currently over 394 PropTech AI companies being analysed on our platform. Far too many for anyone to make sense of. And so we decided to enhance the offering.
Rather than simply listing companies, we realised it was our job to help real estate companies go one step further and identify the best single AI company for them to speak to and potentially work with, based on their specific requirements.
That’s when we built and launched our procurement feature, a tool with which we do all of the hard work by filtering our 7,000+ companies down to only those appropriate for each real estate firm’s needs.
This simple pivot in company priorities means that Unissu is able to directly solve an industry pain point, something we were failing to do at the start.
But the most important part for this article is that we did so because of feedback and input from our customers, and this is where the phenomena of pivoting startups can be of great value to agents.
Inspire the pivot to gain from the pivot
You know by now that you need technology to flow throughout your business. No doubt you are on the receiving end of endless pitches from PropTech hopefuls who will come in and try to sell you on the brilliance of their platform.
But I want to encourage you to focus on the founder(s), just as much as the offering.
Yes, it’s important that you like the potential of their proposed business model, but equally important is your appreciation of the founding team.
Do they appear hungry to learn about and understand your specific business and its needs? Or are they simply trying to tell you that you need, need, need their solution? You should only work with the former.
I say this because if they want to learn about your specific business, it suggests that they understand that rule one of innovation is solving a genuine pain point, not a homogenous, theoretical industry-wide pain point.
Therefore, it’s possible that, with your input and advice on what you need, the startup may realise that new features need to be developed or perhaps even that a full pivot is required.
In such cases, you are now a direct influencer of this, and therefore a direct beneficiary too. In some cases, you could even share in the ongoing future success that results from the pivot.
We can look at Lavanda as an example of a PropTech startup successfully pivoting as was reported this week. I remember when it was an on-demand laundry business!
Now its's a full-blown, multi-million pound short-term lettings management platform. Since those early days, I’ve recognised its founder, Guy Westlake, as a very smart guy, hungry for information which he absorbs like a sponge. He observed the market, always listening to his customers.
To cut a long story short, Lavanda noticed that the majority of its business was coming from Airbnb properties, and similar short-term rental platforms. It soon realised that the hosts and management companies some of them hired had other needs and pain-points, aside from laundry, running throughout the process of letting, and so started building the required solutions, bolting them on top of the original laundry services.
Importantly, by getting to know its short-term letting customers, Lavanda learned that much of the activity around this sector was illegitimate and that, as a result, “management companies were facing difficulties in quality control and consistency of their hospitality operations as they tried to scale”.
Lavanda decided to try addressing all of its customers’ pain points and, fast-forward to today, has now raised €4.5 in Series-A funding. Equally important is the way that its customers were able to speak directly with the company and inspire its evolving services.
Agents should aspire to do the same with the never-ending conveyor belt of PropTech startups who come knocking.
Agents can pivot, too
Not only can agents benefit from engaging directly with the right PropTech founders to inspire them to pivot their business model, agents can also pivot their own business with great success.
There is a fantastic overview of why companies pivot here, from The Founder Institute, and I think it offers a very simple checklist that agents could follow when asking, do we need to pivot?
- Is your company always playing catch-up?
- Is there too much competition?
- Has your growth hit a plateau?
- Does only one aspect of your business gain any traction?
- Has you own perspective on the market changed?
These are all questions that agents can ask themselves. If the answer to any is ‘yes’, then it might be time to pull a Lavanda, talk to your existing customers, get to know their needs and expectations and, most importantly, get to know their pain points - this is where the potential for extreme value is found.
It might seem daunting or risky to move away from what you’ve been doing for years, possibly decades, but sometimes a change is required for the future to remain bright.
By trying something new and acting to increase your profitability while giving your customers exactly what they want, you open new avenues of potential revenue which would otherwise remain closed.