It's a very big market, with very little useful technology. So naturally everyone and their dear old Mom wants to 'disrupt' real estate using the internet.
But how many entrepreneurs, or RealTech/PropTech founders, 'get' the market?
For example: "We're launching a platform to dis-intermediate agents from the process of buying/renting out a home" is a common claim start-up claim. It's also one that has no bearing on the reality of a home transaction.
People with a property to sell (let's call them property owners) choose to pay thousands (in any currency) for someone else to market their home, find a buyer/renter and take care of negotiation and paperwork.
The internet already exists, as do property portals, which most property owners can put a listing on (often via 'low-cost agencies'). So why are these DIY property sellers/landlords not more common? What is it that compels them to pay someone else a large slab of electronic cash to do work that doesn't seem very difficult?
Not fear of work. Fear of getting it wrong. Fear of missing out on the best price. Fear of ending up with a bad tenant in their home.
If you 'get' real estate, you'll understand how this fear governs most decisions by property owners.
So, your low cost agency competitor service: leaving money on the table.
And that new listings platform with an incremental improvement to the dominant platforms: no-one cares, as they aren't fearful about the search process.
Buyers/renters fear the search process, with phantom listings and their time often being wasted. But supply controls the market and every behaviour in that market. Property owners control that supply. They be the boss. Only their fear counts.
Ok, to recap, we've established the two laws of real estate (marketing):
1. Property owners will pay someone else lots of money, through fear, when selling/renting out my home.
2. Supply controls the market - buyers/renters are the tail that doesn't wag the dog.
How do you turn this into start-up jackpot cash?
a. Do an 'Urban Compass' - be 'someone', know 'people', tell 'great stories', raise 'tonnes of cash', keep raising and telling stories while fumbling through different business models, SELL before the music stops and don't get caught on the other (down) side of that exponential growth curve.
b. Do a 'Cozy' - have talent (design or engineering), employ talent to 'fix' one 'small' part of a broken process, raise 'modest' cash to fund growth of that simple fix, get plaudits for succeeding without overreaching, be one of the few trusted partners to property owners when the mobile world takes over and simple (beautiful) tools are what people replace paper processes with.
c. Do a 'Fixflo' - have legal 'knowledge', 'scale' that knowledge in a simple online form, 'sell' that form before building it, 'build' that product and collect that cash, slowly grow and continue to generate cash, offer customers 'added value services' to 'increase cash per customer', then use that cash to build a beachhead for your simple product so that everyone needs to pay you.
d. Do a 'Zoopla' - be a successful entrepreneur who is a 'known quantity', 'raise' funds from angel investor friends, 'build' a product that satisfies your own need, 'realise' no-one will pay you for that product, 'raise more' money from VCs, build a 'clone' of the dominant portal and their business model, 'acquire online audience' by buying all the other failing portals for dirt cheap, 'sell' to agents on fear (if you don't support us, Rightmove will dominate), 'advertise like crazy' when there are no more rivals to acquire audience from, then 'exit' by milking the company's cash through dividends before you 'float' secondary shares on the market to further cash in.
Each of these entrepreneurs 'got' real estate and are making, or have made, money from a start-up in the space. None of them are a shoot-the-moon revolution. That's probably why they succeeded in making money.
Property owners are fearful. Allay their very real fears, and you'll make money.