We are all operating in peculiar times. Times of great upheaval. Our lives are both in a complete state of flux whilst also, strangely, in a period of peaceful simplicity.
Some of you, most perhaps, are furloughed. Many are housebound and spending more time with their family than ever before - whether this is a good thing or not, remains to be seen.
The business world is equally peculiar. Despite all the help available, businesses are scaling back or shutting down - 750 from Foxtons on furlough and 20% pay cuts was Friday’s news, while others, perhaps just a few, are excelling.
Grand visions are being scaled back while others are looking to their future and making a huge leap to a new and exciting personal career change.
I will cover all of this today, trying to weave in stories from the past while looking to the future. Just what can we see in the trends being reported out there and how can this inform us of what to do now?
Last weekend, I was able to read the paper almost cover to cover. The ‘World’ section of the Times caught my attention the most.
‘Crown prince’s $500bn city of the future in crisis’ went the headline. I have followed this story for years. The prospect of a ‘new’ city (our own cities simply lack all infrastructure needed for the demands of society moving forward, so I believe these to be integral) have always excited me. Indeed, I covered Neom, here in EAT back in 2017.
However, here starts the evidence of what I will call the scale back phase of global crises. Visions, true blue sky thinking visions, that are needed for a sector to move forward are being scaled back.
For example, Neom is being scaled back considerably. Part of the 2030 Vision Plan put forward by Sheikh Mohammed bin Salman (MBS), Neom was a ‘scheme’ as much as a city.
It was going to cover land over three countries, Jordan, Egypt and large parts of Saudi Arabia. It was a city that was based on flying cars and robots and would have demonstrated a new, perhaps ironically, green way of living.
It was a way for the area to avoid the dependency on oil. Again, slightly ironic because the IMF warned that spending so much on projects like this could mean their cash reserves run out within 15 years (and this was before the oil situation we find ourselves in currently).
History suggests this isn’t new, the scaling back of mass projects during times of crises. Many will know that a lot of my love of the future comes from a love of visionaries from the past. The development of new lands being a pivotal part of these visions.
Many of you will have heard of the famous Henry Ford. The visionary car maker from the late 19th and early 20th century. He revolutionised the way the car industry worked. He was an innovator and a huge success story. He wasn’t the first but was definitely the most innovative and saw new ways to drive efficiencies in the industry. He launched his famous Model T when there were already 2,200 car models in circulation.
Within just over a decade, Ford employed 200,000 people, produced half the world’s cars and was the most successful industrialist in history, worth perhaps as much as $2billion.
However, he suffered the same fate as MBS. He had an even grander plan, perhaps driven by ambition, more so perhaps vanity and arrogance.
In an effort to own the whole supply chain (what he was famous for really), although, in reality, not wanting to be held to ransom by others who could stop his production, he wanted to ensure he controlled the production of rubber.
Before artificial rubber was used on tyres, rubber had to be grown from rubber trees. Originally discovered in Brazil, rubber trees were a revelation but the US didn’t want to be held to ransom.
While others discovered rubber grew better elsewhere (the Brits really drove this understanding, but I shan’t bore you), it was Ford who had the idea, perhaps rightly so at the time, to want to take over Brazil and try to own the production there.
While he owned 400,000 acres of forest in Northern America - he used all the timber for production in his factories - his plan was to build a model American community in the jungles of Brazil.
As Brazil was desperate not to lose its rubber industry to other countries, it negotiated a deal with Ford and sold him 2.5 million acres of rainforest to build his own community and rubber plantation.
He called it Fordlandia. No kidding.
Much is written about the great mistakes made at Fordlandia, I shan’t cover the details here as, whilst they are hugely fascinating, they bear no resemblance to this column. However, what is relevant, however, is that the great depression ultimately killed off the project.
His vision was curtailed, this foresight lost. The great depression gave him his out and he realised that he couldn’t own the whole process and left Brazil with his tail between his legs.
His vision of this great American community deep in the depths of the South American rainforest were never completed.
Curtailing of dreams past and present isn’t just related to grandiose plans of city development but has also been seen just recently in the PropTech world. Just this last week we have seen one or two of the more ambitious projects stall.
Let's start with Compass, “a real estate firm promising to shake up the residential brokerage industry”. After a $370 million investment from Softbank (don’t get me started on large visions not perhaps working out - in the short-term), it valued the company at over $6 billion.
Needless to say, that is a lot of money for a PropTech business. The issue being it hasn’t yet realised its vision and this is the next part of the story today.
Visions sometimes do not match reality. Disruptors do not actually end up disrupting.
They upset the apple cart for a bit, but actually resort to more trusted means in due course.
“Last year, Compass’ approximately 15,000 agents completed about 112,000 transactions worth $88 billion. The company says that it’s now the largest independent brokerage in the country. But the richly valued Compass remains far behind Realogy, whose 300,000 agents closed 1.4 million transactions worth $505 billion in 2019.”
This pattern of disrupting not really disrupting is then maintained in this rather scathing article about Zillow and Redfin too.
So is Covid-19, the vision halter?
It maybe the vision halter, but you will also hear that periods of times like these are also the great opportunity. New visions are formed. Some out of necessity, some out of timing.
Early in this crisis, many of you will have heard stories about how, during the plague of the 17th Century, Newton was at his most productive. During ‘self isolation’ (during this time he was sent home from his studies at Cambridge!) he wrote his theories on calculus, optics and, perhaps most importantly, gravity.
Newton, allegedly called this period, his ‘annus mirabilis’, the “year of wonders.”
It is of no surprise, therefore, that there is great potential for some business ideas in this period of time. In fact, we recently made a list of business that are of great benefit to property companies during the Covid-19 period.
This isn’t just about businesses succeeding, however, this is about how you, the individual, can make decisions in these crazy times.
You may not have a business yet, but you may have an idea. You have the time to build out these thoughts so use this time wisely.
Perhaps you can have your ‘year of wonder’, too.
By way of example, I often talk about the transfer of human capital from property to PropTech. Indeed I challenged the industry in two pieces early this year - firstly senior managers and secondly the core role in the business, negotiators - with nearly 7,000 views and 12 comments such was the response of that last piece.
There is no better time to reassess your own position and make a decision on what you do next. Do you go it alone? Do you start something new? Do you stay in property or start looking at technology options?
Do you create a vision looking at the situation you see in front of you?
To quote Rupert Parker, the ex Head of Futureproofing at Avision Young (formally GVA - the World’s fastest-growing commercial real estate services firm), “what property professionals typically lose through the course of their career is a holistic appreciation of the world”.
Rupert says this as he starts his future journey, building a PropTech firm around building passports.
He has left the property sector and entered PropTech - to get his appreciation back, perhaps? Whether that is the right move remains to be seen, but the point here is that he has created his own vision and wants to plough his own field.
We may have lost our appreciation for the holistic appreciation of the world but there is one undeniable truth. Technology has helped us, the property industry, get through, or rather maintain and manage operations during this pandemic. It is speeding up the whole process of digitisation.
This is further reinforced by a quote from CBRE on its recent employment of a Head of Technology: “The Technology sector is set for sustained growth and continues to attract both significant venture capital and international investment across the UK and the wider EMEA region. It is currently seeing heightened demand from businesses and consumers resulting from the accelerated digitisation of business processes, communications and data networks in the wake of the current pandemic.”
While this article starts with stories and visions of the past, demonstrating how global issues cause visions to halt in their tracks, it is really about the opportunities that periods like these create. New ideas, new thoughts, new ways of working and a new audience that, especially in this current situation, have been forced into action like never before.
I will give the final word to Rupert as it reflects my own opinion and character so well: “I’m known for my cautious optimism, but seriously… (if you can find capital) what better time to start a PropTech business?”