By Kylie Davis
The Australian proptech universe is currently estimated at around 650 businesses.
This recently prompted the question as to whether this meant that there was too many and “when would it all end?!”.
The question is interesting because it highlights the overwhelm many in the real estate and property industry feel when it comes to trying to keep up with the technology and innovation that is constantly being released.
What it also highlights however is that the way we have always typically assessed new ideas and innovations – considering them one by one – is no longer fit for purpose in an environment where the disruption is constant, multi-layered and accelerating.
Rather than trying to hold back the tide of innovation until it slows to a level we feel comfortable with (good luck with that!), we should instead be looking for new tools and ways to better understand the decisions the tech makes possible for us in our businesses.
Changing our language is a key part of that.
One of the biggest misnomers in proptech is that the term proptech means one thing and that all proptech performs the same way.
But the tech has exploded over the past six years to cover the vast gamut of how we plan, design, build, buy, sell, rent, manage, invest, live in and renovate property – as consumers as well as professionals and trades across residential and commercial real estate, property ownership and construction.
So proptech is now an umbrella term and simplistic terms no longer serve.
Equally, trying to personally assess and understand the value of every proptech to your business is both extraordinarily time consuming and overwhelming (I should know). So what can you do?
A better approach is to understand what is the right proptech for your business based not on the tech but based on you. (You can read a deeper look at how to select a proptech here)
To understand this better it helps to realise that regardless of the sector you are in – whether it’s commercial, residential, property management or construction – proptechs like all tech businesses come in three broad types.
These are startups, scaleups and established suppliers.
The businesses you choose should depend on how cutting edge you want to be, the level of service and support you require, and your tolerance for risk.
Here’s how it works.
Pros and cons of choosing a startup
If you are looking for technology that is really new and exciting and the latest thing, you are most likely to be looking at a startup. These are proptechs usually under three years of age. They have a bright idea that they have probably built into an MVP (minimal viable product) and they are in the process of winning their first clients or have a few under their belt and are starting to get rid of the bugs.
There are some great ‘pros’ to startups. Firstly, their ideas are often awesome and are based on industry experience or ‘aha’ moments as clients.
Secondly, start-up founders are hungry for business and will work hard to win and keep clients and you can often help determine the direction and features of the tech. In some ways, well-chosen start-ups can act as a skunk works for your business developing ideas you’ve always wanted to see happen but never had the technical background.
The tech can give you a real edge against your competition and if it works, lead to some significant time savings, efficiencies or expansion of your business.
But therein lies the rub. When you choose a startup you need to understand that as an early client you are going to be a crash test dummy. This means that there are going to be times when the tech doesn’t always perform quite the way you expected or that you’ll be waiting for changes to be made. And startups are often running hand to mouth so there can be resource issues with getting fixes or updates.
This affects how you roll out the tech across your business. My advice is to never roll out a startup to 1000 agents or clients on day one. Instead, choose a small test group within your business and get comfortable with what the tech does (and doesn’t do) and request changes or updates, before you roll out more broadly. See your relationship as a partnership where you are collaborating to get the right results for both parties.
Pros and cons of choosing a scaleup
If the idea of being a guinea pig terrifies you (and that’s absolutely okay), but you still want some really cool tech, consider proptechs in the next category: scaleups.
Scaleups are startups that have succeeded to the next level. Their products work, they’re in rapid growth mode and they’ve got rid of a good proportion of the glitches and are building out their teams. In fact, their tech is pretty sweet – although it will be growing in awareness and popularity.
This means there’s a chance your competitors are also using the tech, but the race with scaleups is around implementation. It’s how you embrace it and how well you incorporate scaleup technology into your business that can give you a leading edge and help you really stand out against your competitors.
Scaleups are usually pretty fleet and flexible, but with their product building traction, they may have a pretty oversubscribed product and technology roadmap. This means your feedback may not be incorporated into their product (and in fact, they may well flat out refuse if it’s counter to their vision of serving the greatest number of clients).
Scaleups are also usually in a high growth stage so it is likely you’ll see lots of new staff joining (or leaving) as the company grows and works to get its culture right. Pricing changes are also possible as sweetheart deals done to help them get started come to an end.
But if you’re looking for technology that is still new and fresh and can make your business stand out without teething problems, a scale-up is a good bet. The idea of testing it and making sure it works before you roll out across your team/rent roll or client list still holds, but you’ll find this easier, and usually faster to do and more support available to help you through it.
Pros and cons of using an established proptech
Established proptechs have long histories in the property and real estate industry and their tech is well known and likely to dominate the market. If you’re risk-averse and only want to use technology that you know works reliably, they are your proptech go-to. They have large sales teams, extensive teams of developers and big support desks to help you if you get stuck, plus all the resources that you’d expect that make them stable and strong businesses.
Because of the length of time they have been in the market, established suppliers are often seen as the market standard. There are many startup proptechs that take on these established players – while their ideas may be good, and prices better suited to your budget, you need to remember that established suppliers inevitably have very deep pockets to maintain their market share.
The challenges established players face are that many have built their tech on older platforms which may mean they now hold a lot of legacy tech debt and/or are now working to make their technology work seamlessly across desktop and mobile. This can take time which you may find frustrating.
The cost and time of dealing with such tech debt are also the reasons why established players may be limited in releasing new products or features. Find an established proptech that is dealing with these issues and has a roadmap for new releases that add valuable new functionality however, and you’re on a winner.
Increasingly, we’re also seeing established players teaming up with younger proptechs through API integrations or acquisitions. Their success depends on how much energy the established proptech gives to supporting its younger partners with marketing and training but it is great to see so many established proptechs today holding the ladder for newer techs to climb.
One of the key issues established players raise is the observation that the majority of their clients only use a small proportion of the functionality available in their platforms.
The way to innovate using established suppliers, therefore, is to find out exactly what else their tech does above the day to day way you use it. Established suppliers usually have large customer support, account managers and training teams to help with this – so it’s really just a question of setting up a time to dive deeper and create adoption projects. Who knows, that could actually be just the fix you’re looking for!
Proptech that works for you
When I hear tales of “we tried proptech once and it didn’t work for us”, it’s invariably because the businesses involved either chose a startup expecting it to work like an established player, whose own internal ability to roll out a change in processes was limited and they required more support, or they are frustrated with established players who won’t be flexible and accommodating to their individual needs.
So when deciding which proptech is right for you, it’s important to not only choose the technology that you think will fix what you want fixed, but that you understand which kind of proptech it is, the pros and cons involved and the skills or support you’ll need to mitigate any risks. Then it should be much smoother sailing.
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.