THE BLOG
Podcast with the 'Godfather of PropTech' Duke Long
I had a very interesting chat with the inimitable Duke Long during the week. We were discussing my '10 Signals' article and after nearly 45 minutes we had got to point 2!
Hence this is Part 1, the follow up will be out soon.
This one covers:
E-commerce
Product fit.
China.
Data management.
Space as a service.
And that’s just the first 10 minutes.
All that and much more!
10 ‘Signals’ of fundamental change in real estate
With a nod to the excellent book ‘Signals: How Everyday Signs Can Help Us Navigate the World's Turbulent Economy’ by Dr Pippa Malmgren, here are 10 signals the real estate world is facing fundamental change.
Signal No 1: In January the Chinese e-commerce behemoth Alibaba bought Intime, an owner of 29 department stores and 17 shopping centres. Why? Because, as 80% of e-commerce in China passes through one or other Alibaba service, and a majority of physical retailers also sell online via them, they have extraordinary insight in to both the supply and demand side of the retail industry. As such, and as they say, they have become ‘a data company’ and with the insights they can algorithmically generate they can probably operate physical real estate better than any real estate company can.
Takeaway: The real estate industry might not be the best people to own real estate. OR the real estate industry needs to dramatically improve its understanding and utilisation of data.
Signal No 2: Last month IBM announced that they had entered into an agreement with WeWork to sub-let an entire building that they in turn had sub-let in New York, with WeWork designing and managing the space for them.
Takeaway: If a company the scale of IBM can find it preferable to have a ‘service provider’ like WeWork as their ‘Landlord’, rather than a traditional real estate company, then the traditional company has fallen several notches down the value chain. A big question mark is looming over the industry: do you have Product/Market fit anymore?
Signal No 3: Google's parent company, Alphabet, has applied to develop 12 acres of land in downtown Toronto in order to create a brand new high-tech city "from the Internet up.” This is not for their own occupation but as a test bed for a plethora of ideas that have been evolving out of their Sidewalk Labs subsidiary for some time.
Takeaway: The real estate industry needs to reconsider who it is competing with. If Google can build a city, then what is so special about the real estate industry? Maybe they can be, in software parlance, deprecated? The tech industry is highly likely to move into real estate. First off the rise of modular and robotic construction (and Drone site management) plays to their strengths. Secondly as BIM becomes ever more powerful and mainstream the industry becomes ever more software led. If the entire design and build, fit out and operational sides of construction and real estate can be digitised then this is an industry that can fall prey to ‘Software is eating the World’ as Marc Andreessen famously said. In this world, the construction industry becomes a low level commodity player, and traditional developers become, if not obsolete, then a lot less ‘God-like’ than they like to think they are today.
Signal No 4: 45% of the US population live within 20 miles of an Amazon fulfilment centre. And that is the most prosperous, highest spending 45% of the population.
Takeaway: As the 3rd most valuable company in the world, Amazon has the financial muscle, operational brilliance, and data ownership, to predictively supply all of those centres with the right product at the right time. Same day, or even often next two hours, delivery is getting ever closer, for a very large percentage of the market. Physical retailers have taken refuge in ‘Click & Collect’ being a driver of traffic to their stores but if delivery is same day or better how strong do you think that allure is? Exactly.
Only the best, or cheapest, physical retail is going to survive. The UK situation is less pronounced but the US is massively oversupplied with physical retail and this year is seeing the highest number of store closures ever. It is predicted that 25-30% of ‘Malls’ are on death row.
Anyone following the rise of e-commerce would not be at all surprised that INTU, the shopping centre REIT is falling in to the FTSE 250 whilst Segro, who provide warehouse space, has just risen to join the FTSE 100. There are other 2nd and 3rd order consequences of this behavioural shift coming down the track. Eyes peeled!
Signal No 5: Computer Vision, aka Image recognition, now errors at a rate of less than 5%, which is better than humans. Images and video can now be searched and analysed, at scale and in realtime on everything from a smartphone to a supercomputer. The world around us is becoming recognisable, and analysable, to the camera in our pocket. Images can be reconstructed from fuzzy fragments, objects can be recognised at vast distances, and 200,000+ people can be facially recognised, all at once, in realtime.
Takeaway: Why does this matter to real estate people? Because, as Mary Meeker highlighted in her ‘State of the Internet 2017’ report that came out this week
“A lot of the future of search is going to be about pictures instead of keywords”
So residential search will move to be by selecting a series of images, that present themselves in accordance with your previous selection, having understood what that says about your preferences.
Commercial space design will incorporate the use of images to better understand, and more quickly, what it is the client is looking for. The same will apply to finding new offices, so the way agents market space will become far more visual.
There is a huge amount of ‘stuff’ that goes into fitting out the built environment: going forward much of this will be chosen utilising image search.
Signal No 6: Concurrently with computer vision, speech recognition by computers has now surpassed human ability, with the latest word/error rate falling to just 4.9%. Voice search now accounts for 20% of searches on Android Phones, and Siri, the assistant built into iPhones, responds to over 2 billion commands a week.
Takeaway: Increasingly we are going to use our voices instead of keyboards as the interface to our computing devices and in turn we are going to expect our service providers to enable us to do so.
So expect to see a lot more customer service being offered via chatbots, as well as lead nurturing, organising bookings, and setting up meetings.
Property searching via chatbots is already available, and in combination with Signal No 5 above, using computer vision to recommend houses, flats, offices has been shown to be more successful than human agents.
Alongside speech recognition, natural language processing has improved to the extent that we can expect it to be de rigeur for lease abstraction, contract analysis and the likes within a few years. There will be no billable work in this field going forward.
Signal No 7: Google’s Deepmind subsidiary is now the undisputed world no 1 in the game of GO. A combination of new processing chips (TPU’s or Tensor Processing Units) Deep Learning and Reinforcement Learning has given them mastery of a game that has more options than there are atoms in the observable universe.
Takeaway: AI is about to become a very big thing, much faster and probably more pervasively than even most experts thought. Perhaps 60% of the tasks people do within the real estate sector, with a noted bias towards finance & asset management are sitting plum within the crosshairs of what AI is good at. The large incumbents have both the most to lose and the best chance of co-opting ‘the machines’ for competitive advantage. If a major firm suffers in the next five years it will be entirely the fault of their management.
Signal No 8: From every quarter there are signals galore that the world of work is changing. Google, in their Workplace 2020 report, last year said ‘flexible working will be the defining characteristic of the workplace by 2018’. There are an every growing number of freelancers, through choice and through necessity, the ‘millennial’ generation is fast becoming a major component of the workforce, whilst at the other end there are a growing number of older people in the workplace. With 48% of people working for companies that employ less than 50 people, just 12% for companies between 50 and 250 employees, and 40% for larger companies, the world of work is becoming very barbell shaped. Throughout, the work that people actually do is changing fast and how offices are used is changing alongside.
Takeaway: A combination of these factors is leading to the inexorable, and increasingly rapid growth in ‘the six modalities of occupation’ - where a company uses a mixture of: long term leased space, short term leased (serviced offices), membership spaces (co-working, clubs), 3rd spaces (libraries, coffee shops), clients offices and, of course, home. This will change the composition of space required by the market, and the characteristics of that space.
Signal No 9: WeWork, founded just seven years ago, is valued at $18 Billion.
Takeaway:
THE REAL ESTATE BUSINESS IS NO LONGER ABOUT REAL ESTATE!
Signal No 10: Apple’s iPhone has just 18% of the global market for smartphones, yet generated 90%+ of all the PROFITS.
Takeaway: The success of the iPhone is predicated on two things. First, the BRAND itself is so incredibly strong that Apple can be the lowest cost manufacturer in the market but have the highest margins, And secondly, the iPhones strength is that Apple control the hardware AND the software of their products. This means they can make each side of the equation optimal for the other. In essence they have the greatest control over the UX or user experience.
The successful real estate companies of the future will do the same with their assets. As the industry moves from selling a Product to providing a Service, being in control of the hardware and software sides of their business will be key. The physical spaces must operate optimally (and the rise of IoT etc makes all this possible) but they must be accompanied by a ‘digital layer’ of services that are curated by a new type of Property Manager whose purpose and role is to make the user experience of each and every person who enters a property as enjoyable and friction free as possible.
This #SpaceAsAService mindset will be what will create great Brands (the expression of the user experience) and in turn determine the Value of an asset. UX is the Brand and Brand is the Value.
As a differentiator the real estate industry will never have seen anything as powerful. But it will be hard to pull off, and as suggested above, maybe will not be something that falls to real estate people to do?
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So there we are: 10 Signals. As ever, understanding where they lead is the tricky bit. But you have to try.
Antony
Smart Buildings, #SpaceAsAService and the Human Deficit
How many times have you heard Property people say that “Property is a people business’? Dozens, hundreds of times I imagine. Now, how many times have you heard them say that “Smart buildings are about people”? Never I suspect. No one in property ever says “Smart buildings are about people” do they? And why not? Because the property industry understands hardware but does not understand software. It understands Products but does not understand Services. And that leads to the great, glaring human deficit when it comes to Smart Buildings.
It is very telling that whenever Smart Buildings are discussed it is always The Edge building in Amsterdam that is used as the exemplar, even though that building was finished over two years ago. In the intervening two years we have all heard a lot about Smart Buildings, it's just that there don’t seem to be any, apart from The Edge.
So what is going on? With so much hype why aren’t the dozens of prime office buildings completed in the last two years showcasing just how ‘Smart’ they are?
Because they’re not. The second telling feature of The Edge is that it is occupied, and was built in collaboration with, a single occupier. And therein lies the dirty little secret about Smart Buildings; without the deep technical AND human awareness of and involvement with the occupiers of a building, it is not going to be truly Smart.
I’ve just looked up a definition of Smart Buildings and prominent in the Google results is this:
‘A smart building connects information in an open format, allowing for the development of new applications that save time, energy, and operating costs’
It does go on to mention ‘People and Technology’ but only in the sense that
‘the people that run a smart building are a crucial component of its intelligence.’
Which is fine, but thought of like this there is nothing ‘Smart’ going on; all we are talking about is buildings with modern, up to date systems that can all talk to each other.
So what? That is, and should be, table stakes for any new building. Just like any new car is likely to have sat nav, cruise control and air conditioning, having a building that uses modern technology is not a big deal, or a competitive advantage.
The problem with the way the industry looks at Smart Buildings is that they think in hardware terms. They talk of smart power grids, building control systems, waste processes, optimising chillers and lights that turn off when no-one is there. All these things are important, but until they connect with the software side of a building, they are, frankly, ‘dumb’.
And the software side of a building is all the things about the building that ‘Serve up’ a great user experience. Think of a smartphone: in hardware terms they are all pretty much of a muchness; it is the layer of services, provided through apps developed by an ecosystem of partners that brings the differentiation. Android users might not agree but the reason the iPhone hoovers up 90% of all the profit in the smartphone market is because of the extraordinary way the hardware and software within the device works together to create a compelling user experience.
And sticking with the smartphone analogy, how can these devices provide each and every user with a unique set of tools that is personalised just to them? Because they are packed full of ways to learn about each and every user, in increasingly granular detail. Your phone, and the apps that appeal to you (there is no ‘standard feature list’) learns about you, your likes and dislikes, your interests and attitudes, and uses this knowledge to tailor the provision of services accordingly.
You can opt out of what some people think of as rather spooky ‘spying’, and that is fine, but the trade off is that you will only get the plain vanilla services which you can take or leave. Over time, as behaviours become learnt and attitudes adjust to a changing world, few will want to opt out, as the ‘consumer surplus’ of opting in becomes so great.
Which brings us back to Smart Buildings. Truly Smart Buildings will be ones that, through hardware, software and a very large input of human skills, understand each and every person within them and flex, adapt and learn how to provide everyone with the environment that is most suited to their needs at any given time. Smart Buildings are learning systems: the more they know about you as an individual and your co-workers and other occupiers as a group, the better the service they will be able to provide you with.
And this is a foundational reason why a large percentage of office users will, within a 5-10 year period, opt to work in offices run along #SpaceAsAService lines. In spaces like this the entire environment is managed by the same team of people and because they therefore can become intimately aware of how the space is being used, who uses it, and what works and does not, they will be able to tune the Smart Building to perform as well as it possibly can.
The Edge, with Deloitte as a single occupier has this advantage, and it is well known that how the building operates is constantly tweaked in response to feedback from users and systems. Multi tenanted buildings, where the property manager manages the fabric and common parts and then each occupier looks after their own demise, simply cannot be smart in the manner we are talking about here. They can become efficient but they cannot become smart. They just do not understand enough about how the building really works to do so.
This ‘Human Deficit’ can only be made good by large standalone occupiers or through #SpaceAsAService, and as, for example, 48% of Londoners work for companies employing fewer than 50 people (99% of all companies), my bet is on #SpaceAsAService being the route to truly ‘Smart Buildings’ taken by a very significant proportion of the market. After all, who wants to be dumb?
Antony
New Business Models in Real Estate: Space as a Service
Furuyama Moromasa, street scene Tokyo, circa 1700
The following is the transcript of a talk I gave on the 16th May to a select group of Urban Land Institute (ULI) members:
New Business Models: Space as a Service
A confluence of forces, from the supply side and the demand side, are set to impact on the real estate industry in a quite dramatic way.
This is not a matter of the usual property cycle, where we all know what goes up must come down. And vice versa.
This is structural. The very nature of demand is changing and will force fundamental change in the supply side.
Across all sectors. In fact sectors are merging - increasingly we are beginning to think of Live/Work not as being a binary thing but more of a blend. Barriers between the two are blurring.
The net result of this will be that the industry will need to create, refine and adopt new business models.
And at heart these new business models will all be based around the emerging notion of Space as a Service.
The Real Estate Business is no longer about Real Estate
And this is because fundamentally “The Real Estate Business is no longer about Real Estate”, or at least soon won’t be.
Why?
Well the answer lies in the twin trends of the move from Products to Services and Ownership to Access.
Increasingly we are moving to an almost post consumer world where we are less bothered about accumulating more stuff and much more interested in being provided with services, experiences and ephemeral pleasures.
So Uber instead of Cars, Spotify instead of CD’s, Netflix instead of DVD’s: on-demand this, on-demand that. Why bother to own something you seldom use, that becomes out of date rapidly, or that you really cannot afford. Rent it when you need it.
And Real Estate is not immune from this trend.
Just as it is now easy to buy almost any Software as a Service, so it will become with real estate. Space, as a Service, is the future of real estate. On demand and where you buy exactly the features, and services, you need, whenever and wherever you are.
Key though is that this extends beyond spaces rented on-demand; regardless of tenure it will become important to be able to also rent or purchase on-demand all the services one might need to make the most of your space, or to enable the most productive use of that space.
5 Tech Megatrends
And there are 5 technological ‘megatrends’ that are ‘the great enablers’ of all the change heading our way. And each of these are on an exponential growth trajectory. Indeed they are all hitting the uptick of the exponential curve
They cannot be resisted and the Real estate industry needs to co-opt them as friend not foe.
And they are:
Mobile - we all now have a 1990’s supercomputer in our pocket
Connectivity - That is connected via ever faster, more ubiquitous broadband
The Cloud - Connecting to all our data being stored in The Cloud, giving us access to practically unlimited computing power and all of our data anytime anyplace.
Internet of Things - With increasing quantities of data becoming available as we connect anything worthwhile to the internet, no matter how small or idiosyncratic. Like it or not we are beginning to live in a Panopticon.
And sitting on top of all of this is the fastest growing area of all,
AI and Robotics
It is developing at such a speed that the really important change in the workplace will come from the changing nature of the work we do, rather than where we do it.
In January of this year McKinsey said that
““Overall, we estimate that 49 percent of the activities that people are paid to do in the global economy have the potential to be automated by adapting currently demonstrated technology.”
So that is a lot of work that humans will no longer need to do.
And the slide above explains why these advances in AI are so dramatic. It is because AI algorithms can take advantage of the incredible parallel processing power of chips used in gaming machines - GPU’s, as opposed to what all the rest of us rely on in our computers CPU’s.
What is extraordinary though is the advances in GPU’s - these two lines at the bottom, with their seemingly meagre growth, represent CPU’s and chart growth based on Moore’s Law, where computing power has roughly doubled every two years for the last 50.
As you can see Moore’s Law is being trodden in to the dust by the growth in power of GPU’s.
Which means, AI is going to become a very big thing for all of us in a very short time.
As I say, the robots are coming.
Which explains why when we look at Image recognition, the machines are now on a par with humans
In 2010, computers failed to recognise about 28% of objects, or faces, they were shown. This is now down to about 5%, which is on a par with humans.
28% is effectively useless - 5% is endlessly useful.
So are we talking Human/ Machine Parity?
Err... no
Because a computer can recognise 200,000 images simultaneously in real time.
Natural Language Processing
A similar story can be told about natural language processing, or speech recognition
We judge how good this is through the word/error rate, and humans make about 5.1 errors per 100 words. Currently computers make about 5.9, so we are getting very close to human level performance here as well.
In 2010 computers made about 16 errors per hundred.
Again we have effectively gone from a technology that wasn’t really much use to one with huge utility.
And knock on effects for work and the workplace
The Changing Nature of Demand
And these technologies are going to profoundly impact both where we work, and where we live.
• The nature of ‘Work’ is changing. It’s not change in the ‘way we work’ that matters but the ‘nature of work itself’ -
• We really do not NEED offices anymore, we really do not NEED shops anymore. In fact we really do not NEED an awful lot of real estate. That is not to say we don’t WANT these spaces, but what we do in them will change.
• If 49% of tasks today could be automated, then it seems clear to me that we need to start concentrating a lot harder on the things humans are good at, and computers are not. As tech becomes exponential, we need to foster exponential humanity. All of which leads, I think, to a need for what I call ‘The Imaginarium’: space that allows our human skills to flourish. Places we go to to do what humans are good at.
• Then we have the changing look of the enterprise - the seemingly relentless rise in freelancing & the contingent workforce.
• In their report, “Workplace 2020” last year Google wrote that ‘Flexible working will be the defining characteristic of the future workplace.’ and the bigger the company the more so. In companies of over 6000 employees 66% will work flexibly by 2018
But most companies are small.
• The City of London for example is not what you thought: 80% of companies there have fewer than ten employees. Half the occupied units are less than 5,000 sq ft
• 72% are less than 10,000 sq ft.
• 99% of London companies employ less than 50 people
So a large percentage of occupiers very suited to flexibility.
• Which will bring us I think to thinking about “The six modalities of occupation: It will not be uncommon for each company to split up their office footprint to be a bit of each of these — Central office, Hub space, serviced office, co-working space, client office or home.
• And then you have the rather big unknown of where people will decide to live, in an AI powered world. Perhaps with the rise of autonomous vehicles many may choose to live a considerable way away from where they work, as the commute would be standard working time, once you do not need to drive. Bain wrote a report suggesting this last year. Against that you have Richard Florida’s Creative class idea that Cities are just too exciting for people to resist.
Either way ‘All Change’ are the best two words to sum up the changing nature of Demand.
The Changing Nature of Supply
So how will all this change supply?
Well you have people who:
• Prefer services over products
• Don't need to go to an office to work
• Are used to on-demand
• And are uber connected with vast computing power in their pocket.
The answer, to me, has to be #Space As a Service - space that takes account of these four trends. Space that is specifically designed to allow humans to do what they are good at.
And that take advantage of all these technologies to remove friction wherever possible and enable discovery.
Friction in the sense of making anything one needs to do to be as friction free as possible. How does this space enable me to do that? How easy is it ‘get stuff done’ in this building?
And Discovery in the sense of being able to find, or access, anything I need to do my job, or make the most of ‘the space around us’.
Where does this lead?
• It means Landlords moving from being Rent collectors to service providers
• It leads to Physical space alone being considered as ‘dumb’ - it is the ‘digital layer’ of data driven services that makes it smart
• It leads to the user experience of your space being what defines your brand - and your brand being what defines your value
• And to create a great user experience you need Great Data + Great tech + Great Humans - all three. Two out of three IS bad.
• And it leads to a far more important, pivotal even, role for Property Managers as they become the curators of the user experience. So the days of that industry always working down to a price are, hopefully, coming to an end.
Culturally this is going to be hard for the real estate industry. In fact I see it as the biggest challenge. Are real estate people really the best people to operate real estate?
It’s a serious question, that three recent events underline.
First, Alibaba the e-commerce company, bought a large shopping centre/department store owner in China earlier this year.
Secondly, IBM - yes IBM - have just sublet an entire building in New York from…. WeWork. Just shows it is not plain real estate they were after.
And thirdly, Google have just submitted an application to develop a 12 acre site in Toronto.
This is not going to be easy….
But…
Space as a Service IS the Future of Real Estate
Retail in 2017 - the year offline and online merge
Gustave Courbet - Bonjour Monsieur Courbet - Musée Fabre 1854
On the 2nd March 2011 Steve Jobs was on stage launching the iPad2. During his presentation he made the case for why Apple was not just another computer company. “It is in Apple’s DNA that technology alone is not enough — it’s technology married with liberal arts, married with the humanities, that yields us the results that make our heart sing.”
In 2017 you could transpose this quotation to read “It is in the Retail Markets DNA that the liberal arts, married with the humanities is not enough - it's by adding technology and data that yields us the results that make our heart sing.”
Yes the product is still of primary importance, and it is artistic and intensely human skills that are required to create goods people want to buy, but these alone are no longer enough. All of us need to know our customers better; who they are, what they like/dislike, what they buy, what they crave, when they shop, where they shop, and most importantly of all, what makes their 'heart sing'. That's a tough ask isn't it?
Historically it has been nigh on impossible to understand our customers this well, at least since the era of Supermarkets and Shopping Centres put paid to people shopping in the same local shops every day and being served by the same person, who was probably a neighbour anyway.
Now, apart from understanding our customer deeply, we have to contend with the great elephant in the room, the online, virtual world. The old shibboleth of 'people like to touch things' has proven to be wishful thinking. Amazon is now the 4th largest clothing retailer in the US, online sales are growing multiples of times faster than in store, and it is likely that 20% or even more of all sales will be online in the UK by 2020.
We have to acknowledge that most people, for most products, do not HAVE to come to a store to shop. Yes Click & Collect drives a fair amount of traffic to stores but this is just a temporary windbreak until the likes of Amazon crack same day delivery at scale. In the US Amazon have depots within 45 minutes of 25% of the population. Certainly within major cities, very fast delivery will be a solved problem within a few years.
So what do we do with physical retail? The answer is two part; first, the experience of shopping has to be exciting, stimulating and very agreable. The aim must be 'the liberation of dopamine'! This is the liberal arts and humanities side. Great product, environment and service. A friction free sensorial treasure hunt. An experience that cannot be replicated offline.
The second part is that we need to use technology, data and networks to understand our customers in such depth that we can personally tailor the experience our shops and centre deliver to each and every visitor. But how? Well in 2017 it is not 'Go West, young man' but 'go East', and look at China. In particular look at the incredible online behemoth Alibaba, who are involved with more than 80% of ALL online shopping there.
In January they bought Shopping Centre Owner Intime, who run more than 30 mid-to-upscale department stores across mainland China for $2.6 billion. "Today we cannot just separate online and offline" said Alibaba CEO Daniel Zhang. This is like Amazon buying Hammerson and is a huge signal that big change is afoot.
Why would they buy, outright, 30+ shopping centres? Because they have realised online isn't enough and retailers need shops? Absolutely not. They have realised that the future of retail is where online and offline merge into one offering for the public. Zhang describes it as a networked distribution channel, that is a closed loop and data driven. E-tailer and retailer come together to be one.
Imagine how accurate the profiling could be with the e-tailers knowledge of what people are buying locally, what the retailers have in stock, and the profiles of millions of individual users. Bolt on online payments in store, shared warehouses and a battle hardened logistics operation, and you have a 'data platform' that facilitates exceptional customer experiences.
This is Systems Thinking on a grand scale, optimising the entire value chain. Perhaps it is only Alibaba in China who are in a position to do this, but the underlying strategic imperative to create an end to end offering that is soft and flexible enough to cater for any number of whimsical customers is an idea to take to heart.
If you know what a customer wants, and also what is available, then you are in a position to create compelling reasons to visit your shop or shopping centre. To the shopper the experience is very human, very soft and pleasurable, but under the hood it is all about data. The more data you have and the more you understand the four V's about it (Volume, Variety, Velocity and Veracity) the greater the experience you can provide your customers.
Online and offline are merging to create something better than we have today. It turns out that technology and the liberal arts, just as Steve Jobs said, not only need each other, but together really can make 2+2 = 5.
And how does this impact Agents?
So how does this merging of Offline and Online impact on Agents. If their Retail Property clients are morphing from being ‘Property’ people to ‘Data’ people how is that going to impact relationships? Will they even understand each other? Where does PropTech figure in all of this?
The answer lies in what PropTech, in fact all technology, is really there to do: remove friction and enable discovery. Wherever there is a kink in the road, or a bottleneck, that makes doing X harder than it should be (or you’d like it to be) then PropTech’s job is to remove that blockage. Where too much time is spent trying to find out Y, or the answer to Z, then you have a ‘discovery problem.’ You might put this down to information overload but what you are really experiencing is filter failure; the inability of your systems to break down your data, to understand it, and to return to you exactly the information you need, when and wherever you are.
Truth be told, PropTech is about making your company a technology company. In a similar way to how Alibaba boss Jack Ma says ‘We are a data company, not an e-commerce company’ Property Agents have to become, at heart, data companies. Sure, they can retain and exploit all their human skills, but what is their actual purpose? Buying, selling or leasing property is what they are paid for. And to do that they need to understand exactly what their asset is (far more than bricks and mortar), who they are likely to transact with, and why that entity is going to deal with them as opposed to someone else. It should not be an accident that an agent introduces this property to that retailer. Serendipity needs to be engineered.
A great deal of data is in the public domain nowadays, but much of the really valuable data is in the hands of agents, even if many/most of them either do not realise this or do not have the tools (or inclination) to make best use of it.
PropTech startups are desperate for the sort of data that agents leave lying around. At the moment agents are largely protected from ‘disruption’ because startups don’t have access to the data that could rearrange the real estate value chain. That though will not maintain. It is an ‘unknown unknown’ but something will occur to upend the apple cart. In business it always does. Either a data owner (one of the big surveyors) will partner with a startup to leverage their own data or they will build the capabilities in house. And when they do, this newly fangled technology company, that happens to operate in the real estate sector, will be enormously powerful and dramatically more competitive than the bulk of market players.
The company that understands that they are in the data business, and that augmenting the human skills of their most capable employees is the way to out-compete their peers, will be a force to be reckoned with.
In my crystal ball disruption to the world of agency will come from within. When PropTech moves from being a niche silo to be being part of an agents DNA, feathers will be ruffled.
Who will make it happen?
Antony