I recently read the news about Settled closing its doors. As of 6.29am on Tuesday morning, the article had been read by 8,642 people and attracted nine comments.
Most of those comments I felt were missing the mark in a considerable way. Let me explain why, as it is important if we are ever to move forward.
I met Gemma Young, the chief executive of Settled, early on in their journey. She is super smart and hyper-focused. Something you might expect from an ex-Googler, as one of the commenters phrased her yesterday.
By that point in my own journey, I had spoken to hundreds and hundreds of start ups. It was rare that one stood out for me, but Settled was one of those that made sense. Yes, it was a model that was already in existence but, there was the subtle difference in the act of negotiating that they were trying to solve.
I always felt that the negotiations between parties was, and indeed is, the most valuable and important intervention an agent/broker can make.
Here in the UK (certainly this isn’t the case in other countries I have been to), there is still an awkwardness about upfront, toe-to-toe, negotiation on the price someone is willing to pay for a house.
Us Brits find this the most difficult aspect of the housing transaction.
Settled seemed to be working on a way to solve this (in a way that only two weeks before my meeting with Gemma, I had seen a very well funded second hand car marketplace doing) and I was interested.
I didn’t hear much after that meeting, but I felt Gemma and her team were at least attempting to a) do something different and b) listen to difficulties of the customer base and address those challenges.
One of my disappointments about the article on Settled’s demise was expressed in this comment: “maybe just maybe all these people trying to find a so-called better way to do estate agency will have to conclude that the traditional way for most people is the best way and there simply isn't the demand for an alternative that is scalable”.
This assertion that the traditional way is the best way, whilst I have my heritage in this method, is crazy.
Settled, which raised £1.2 million (not a huge sum, if truth be told), is simply one company that has ceased trading in these most unprecedented times. How many traditional agencies will close their doors during this period? There will be too many to mention to get coverage in this national publication.
Another commentator, Paul, stated: “Another one bites the dust, the list is getting longer and longer!”. Again, how many businesses are actually going to fail at a time like this?
People are missing the point. There will be many failures, even in usual market conditions, as new business models emerge that test an existing and incumbent model. The key for the existing businesses is to learn from what they were doing well and look at adapting, not waiting till they fail and say ‘I told you so’.
Do not downplay the competitors and certainly don’t deter any action you need to take.
This all comes back to the series I wrote for EAT back in 2019 about true digital transformation.
Putting it briefly, I was suggesting people do not:
And I was saying they should:
It would be worth reminding yourself of this series and then review what Settled (and others) have done around helping the industry.
This is not the time to be downplaying what new models have attempted to do. This is a time to realise that we are all in this together. There is no them and us. They are working just as hard as traditional agents with their customers front of mind, to provide a service that helps them in one of the most difficult situations they will experience in their lifetimes.
We should applaud the start ups that are helping us learn what to do with our existing business models. They are providing a valuable service (to those willing to listen).
Take another example of a business model that, before Covid-19, was starting to pick up traction here and elsewhere: the iBuyer.
I had argued before the benefits in this article, also in this publication, a year ago stating “the customer has certainty. You can’t put a price on certainty.”
I have also questioned its validity previously too, in particular with the crazy move from the Guild to look at this model.
This was all pre-Covid-19. The iBuyer model is now looking hugely flawed and the chickens are coming home to roost.
My comments from a couple of years back look like they are coming true: “Look at the risk in that business model. What happens when the market tanks and they are left with a load of property on their balance sheet that they a) can’t shift and b) is now worth a load less than their algorithms suggested in the first place?”
But, but, but...
Look at the benefits. With hindsight (and a touch of foresight perhaps), we can criticise the business model in a post-Covid-19 landscape but understand what it has taught you.
Embrace - to use one of my recommendations above - what was good about the model and adapt yours.
Coming back to the start of this article and my disappointment of the comments, this isn’t a time to slag anyone off.
This isn’t a time to criticise established businesses which are failing - we will only really hear of the big ones failing at a time like this but I can guarantee that there are many, many, many traditional agencies that will have to shut their doors in coming weeks and months - or to laugh or celebrate those brave entrepreneurs who are taking on the least disrupted industry on the planet.
Incidentally, perhaps this is a time to also pick up on another couple of comments about the £1.2 milllion that Settled raised through investors.
We have one of the most attractive, early stage investment vehicles in the world. Angel (and other, later stage) investors not only know the risks they are getting into but also have serious benefits from supporting businesses such as Settled.
Anyone interested in investing as an Angel - assuming they are lucky enough to do so, needs to realise the SEIS and EIS investment structures.
The former allows for up to 50% of your investment can be reclaimed back through income tax relief and the latter, up to 30%. There are therefore very solid reasons for investors to back these early stage companies and long may this continue. We need to help each other to test and evolve our sector for the customer.
This is a time to come together. Let’s not celebrate the unfortunate, let’s applaud them for trying (and steal their good ideas in the process).