Friends, Feudal Landlords and Commoners,
There's been a flood of AgentTech these past few weeks. It seems many entrepreneurs are pivoting from their 'agent-killing' ambitions. I'd like to call this the Fixflo-effect. They are, after all, the leading light amongst the current crop of Proptech start-ups.
Let me tell you a story about two chaps from Edinburgh. Both super smart, talented and ambitious. They built some beautiful tech to dis-intermediate lettings agents. It was even very memorably branded. But alas they discovered the market was too small and too difficult commensurate with the effort that would be required. Fast forward a few years and that very same duo, wisdom in tow, are tackling a more focused problem and distributing their software in a very lean manner to lettings agents (yes, the very same people they wanted to put out of business).
There's a key learning here: business model matters. Look at how Emoov and Purplebricks, even at scale, have no profitable light at the end of the tunnel. They're entirely reliant on investor capital to sustain them. Then look at Rightmove with their 75% profit margin, and even Fixflo which has been (very) profitable since close to inception. It comes down to unit economics. Does it cost more to attract and service customers than you make from them? If so, look for a better market to focus your efforts on. Like the two chaps from Edinburgh, who went from the ambitious Advancetogo to the no-brainer market-fit of their new product apply.property.
Please feel free to relay news, tips and comments @realpundit
Rayhan's PropTech picks XXIV
SPD host The Future of Offices - 9 Mar - Link
LendInvest Proptech Meetup - 10 Mar - Link
The 2nd Crowdfunding and Marketplace Lending Forum For Real Estate - 10-11 Mar - Link
Propteq Europe 2016 - 2 Jun - Propteq.com
Realcomm 2016 - 21-23 Jun - Link
Zumper acquires Padmapper (Medium)
Take one super loved, bootstrapped start-up. Add tons of VC funded competitors. Turn up the monetisation heat and some inevitable mixing will happen. Consolidation in the rental listings space is the only way these start-ups can possibly win. Look at Zoopla's path to a £900m market cap in the UK, and you'll see a clear blueprint for creating shareholder value. The question with this tie-up isn't whether it'll work, but which start-up is next. RentHop seems a prime candidate. Here's the Medium post from Zumper founder Anthemos and coverage from The Real Deal: Link and Link
Rightmove reports 85% UK market share (PrimeResi)
And has OnTheMarket's launch to thank. The well-intentioned industry 'Mutual' quickly signed up agents with the promise to 'split' inventory between Rightmoveand Zoopla. But on launch we all discovered what cowards real estate agents really are, with only Chestertons choosing to ditch Rightmove... but soon after reversing on Zoopla and returning to Rightmove when they saw no-one else would join them at the edge of the abyss. We've learned a lot in the year since OnTheMarket launched: 1. it isn't going away; 2. Agents can't live without Rightmove; 3. They absolutely can operate without Zoopla. Here's Rightmove's eye-watering performance: Link
Realogy's 2015 net income increases 29% to $184m
Between the profitability of agents and portals, you see the reason why 'disruptive' Proptech has largely failed. And why AgentTech will be the theme for the foreseeable future. Serving thousands of agents is far more certain and profitable (as is Realogy's business model) than competing with them to market to millions of consumers (the model of say Redfin). Realogy really is a great example of where AgentTech ends up: comfortably profitable. Link
Designing a new seller lead tool (1000watt)
People selling homes are the lifeblood of estate agents. Which is why the expensive staff are sent for 'valuation' visits and the cheaper, often untrained staff are left to 'deal' with buyer enquiries and viewings. For the longest time estate agent websites have been reminiscent of the 90s. But there are people guiding agents to a better online life, like real estate industry marketing consultants 1000watt. Some of their agent websites are truly revolutionary, with a focus on showing off people above property. Their latest client efforts are just as incredible: a valuation tool to end all valuation tools: Link
RealtyShares closes $20m funding
Crowdfunding is a marketing no-brainer: own property from as little as you can possibly afford. It's just not the most 'efficient' method. Compare trading your own shares (research and all) with buying a index tracker fund. The vast majority of money is in those funds, rather than people picking stocks themselves. You'll find the ones that win in this space take on that learning: Link