By Kylie Davis
“Isn’t there some proptech out there that is just stupid and shouldn’t even exist?”
This question was posed to me recently on a panel, with the expectation that I would agree and provide the real estate agents in the room (It was a blessed moment between lockdowns!) with permission to dismiss some proptech ideas.
And while I’m not going to deny that there are moments when some proptech pitches leave me wondering “okaaaaayyyyy…”, it is a great question because it reveals the subconscious bias that is worth challenging.
It is thinking that assumes that the way we practice real estate, property ownership, property management, facilities management, construction, design – you name it – is perfect and newcomers with their fancy ideas need to measure up to our existing processes. And THAT is the framework that is limited and unhelpful.
Instead, we need new ways to assess proptech ideas. These new models need to recognise our desire to dismiss is based on a sense of overwhelm at the options out there, but still allow us to keep an open and growth-based mindset.
Here’s what I recommend:
In the same way that proptech comes in three developmental phases (The three phases of startup, scaleup and established suppliers are discussed here) proptech ideas come in three horizons.
Horizon 1: Immediate pain solvers
The first horizon are proptechs that are designed to solve real and current problems that are causing quantifiable pain to specific sections of our industry and its work practices right now.
These proptechs are no brainers to introduce. They have clear and obvious efficiency gains that can save their users time, money and stress – if you’re prepared to go through the discomfort of adoption. (And if you prefer to stay in a world of long term pain in order to avoid short term roll-out discomfort, that’s OK but I probably can’t help you further).
Most frequently when introducing these technologies, there are additional benefits – such as new data access, transparency or business capability. When assessing the proptech idea these are great bonuses but the business case totally stacks up based on a pure cost/benefit analysis.
My point here is simple: stop fighting these kinds of proptechs. Embrace them into your business and hug them hard because they will save you money and make your life easier.
Horizon 2: Growth and capability expansion
This leads to the second kind of proptech which are those whose solutions provide your business with new ways to grow.
Now some of this may be an extension of the proptech you introduced in Horizon 1 because you’re now saving time or the tech itself has additional features, or it may be that due to the fact that because you now have access to data or new and better-performing workflows, you and your team finally have the bandwidth to look at new ways to grow your business.
Horizon 2 proptechs are all about growth. This can be in the form of new ways to earn more revenue from existing clients, winning new clients that match your current profile or expanding the services you offer to new client sectors and expanding into new markets.
Examples of this in real estate include solutions that make it easy for sales agents to find leads and listings or deliver better services to buyers. In property management, we see software that, if fully utilised mean PM’S could offer repair, maintenance and connection services to all clients who purchase through the agency, not just landlords and tenants.
Growth proptechs offer great opportunities for you to stand out against your competitors and reposition your business as offering something new.
But you should only consider a horizon 2 proptech after you have successful H1 proptechs in place. Otherwise, you’re trying to build new opportunities on an inefficient foundation and are piling more to do on top of your current workload – and that rarely ends well.
Horizon 3: Brave new world
When we talk about the disruptive power of proptech, it is Horizon 3 where the big ideas sit.
These are where the big bold brave new thinking that imagines a completely different world of buying, selling, renting, building, managing or investing and owning property is born and they often look absolutely nothing like the way we do it now. Uber and Airbnb were H3 techs to the taxi and travel industry respectively.
In proptech, we see H3 ideas in smart city technology and in real estate platforms that are seeking to change the power dynamic back to buyers, sellers and renters (with agents being optional) and create completely different ways to own, invest and build property.
H3 proptechs are often where the desire to label the idea as “just stupid” and dismiss them is strongest because they challenge everything that we have held unassailable in both our jobs and how we know the world to operate.
But instead of thinking “that will never work”, it is more constructive to stop, take a breath and wonder “but what if it DID?!!”
And the trick to understanding H3 proptechs is that they do not focus on the pain of the current industry incumbents (which FYI is us in real estate). Instead, they look at opportunities to completely rethink the market, the client set and the monetisation because they focus on empowering those in the transaction flow who are currently powerless.
Can you introduce an H3 proptech to your business right now? Probably not, although it may be an interesting addition to your investment portfolio. And it is definitely the tech you should have on your radar.
H3 proptechs are the crystal balls that show us where we are going as an industry and this is can be an extraordinarily powerful lens through which to view your current business and plan for the future.
What would your business look like if some of these ideas take hold and become the new normal? How will you need to change? How would the work you do be different? It’s often easy to see the threats posed by H3 technology but what about the opportunities?
We can’t hold back the tide of proptech – and the challenges of building and funding transformative proptech businesses means many will not clear all the hurdles.
But some will succeed and looking at H3 proptech is a great way to ready ourselves, our workplaces and teams for the radical transformation which can be really exciting.
Kylie Davis is the president and founder of the Proptech Association of Australia. This article is brought to you by Dynamic Methods, the team behind Australia’s largest and most advanced Real Estate forms platform, REI Forms Live, Realworks & Forms Live.