What do BREXIT and PropTech have in common?
I got thinking about this question for a number of reasons this week but primarily because of a huge influx of enquiries of “help needed” e-mails, tweets and phone calls in the past six months.
Since Christmas it has been approximately one a week and I have had four instances this last seven days alone.
They follow a similar line too. “James, we see an opportunity in the UK market. Can you help?”. The conversation then goes one of two ways. Either they are looking to open up operations in the UK and are a/ sending a research party over to understand our market or b/ are recruiting business development people to “grab the opportunity” - yes I have heard that line more than twice! They want to meet to discuss the market and want to know what they should be doing and who else to speak to.
Alternatively, they already have operations and want to marketing and sales support. They have no idea of the market and again want to understand how to access it. In some cases their ideas are so far off that it is quite scary; that is another story all together.
For information, I would say it is a 50/50 split across the two lines of enquiry.
Our domestic market is, whether we like to admit it or not, in the doldrums as BREXIT plays centre stage. Instructions are low, no one wants to commit etc etc (which incidentally, as I have always found it to be, is completely media driven. Insecurity, uncertainty are common terms banded around which doesn’t help Joe Public as they come to making very serious decisions).
However, it is these sorts of markets that really push innovation as companies look to cut costs, drive efficiency and also increase productivity. Recessions are generally good for innovation. Especially in our sector.
What is interesting here is the impact BREXIT is playing on other areas though. With our currency devaluing to such an extent (a predicted 20% further still to go I read this week), it makes our market even more attractive from the outside.
This is partly why I think I am getting these inbound enquiries or seeing exciting news about UK development in the PropTech sector.
Just take the news I received today (I am writing this Tuesday evening), Spotahome, a company I have followed closely for a number of years and have met up with quite a few of their team over this time, have just hired an ex-Uber executive (who was “The woman behind Uber China’s success and ‘led the EMEA operations”) to oversee their growth around Europe.
It wasn’t just her hire that made me think about this question but statements like this from their press release “Spotahome is building a world-class team, following recent Chief Product Officer appointment of former Amazon executive Balaji Nageswaran, with further key positions to be hired within the next few months including Chief Technology Officer, Chief Growth Officer, Chief Financial Officer and Chief People Officer, among others.”
This is all impressive stuff for a relatively young company - set up in 2014 but explosive growth from its Spanish roots and with over $200m of total contract value in the rental sector already - but it was the next statement that made me consider it all further.
“the new executive team will be based in London to benefit from a large pool of international talent, and work in the largest rental market in Europe.”
This is it. This is precisely the reason we are, despite the situation we are in, attracting some amazing businesses to the UK to help our property market. We have the market that most want to be a part of. Yes, it is city centric. Yes, it is still driven by London frustratingly. But, but, but we have a market that others want to be part of.
To give you other examples, we have seen Giraffe, a Lithuanian start up in the VR and 360 photography field, raise a shed load of money recently to come to the UK market with force having raised over £1m - as reported by Graham just a few weeks back.
Reflecting on BREXIT for a minute. Most are suffering deal flow issues. Of that there can surely be no doubt. Therefore there must be a tight pinch on the bottom line at the minute. This is at the top of the organisations which will no doubt filter down to the negotiators as deals dry up.
This is the time when organisations need to reflect on their proposition. Where can they cut costs? How can they do this whilst maintaining, or even improving their level of service to a client? Is their business model right anymore? These will be hard decisions to make but in each of the options are the opportunities.
And that is just it. Opportunity.
BREXIT is giving PropTech (and property) firms opportunity.
PropTech is a global solution to a local problem and none more so for us here in the UK. We have an incredible market and one that can be supported not just by the 600 or so PropTech businesses we have here in the UK but also, more widely. Those we are seeing coming into our markets have, inevitably either succeeded in their own domestic markets already and therefore proven. Alternatively, these new businesses have the guts to see if their model could succeed elsewhere. Both are worthy of opening your door to, discussing with and potentially working alongside.
At the end of the day, in a tough market, it is those that look outside of the box and try new things that will come out on top. Those that stick on the blinkers, thinking it will all be okay, will lose.
The biggest risk in this current market is the risk of doing nothing.