Lessons learned from deploying tech in real estate
Within the PropTech sector, something has largely gone unspoken of until recently: the experiences (and lessons learned) from real estate groups deploying technology products. Recently, our CEO Faisal Butt chaired a panel at CRETech London alongside PropTech innovators and adopters on this topic. This was off the back of research conducted at Pi Labs over recent months, including dozens of detailed interviews with real estate professionals, technologists, academics and others. This culminated in our newly launched white paper which you can now download from our website.
Real estate and uncertainty
One of the most widely cited cliches in the real estate industry is its perceived unwillingness to embrace change. Our research found that this was not a constant through the industry, and that as with other sectors, real estate firms (and the individuals within them) can be plotted along Everett Rogers’ normal adopter distribution as innovators, early adopters, early majority, late majority or laggards. Innovators tend to have an ability to cope with higher levels of uncertainty. This was interesting to us, as our research suggested uncertainty is often perceived as the antithesis of the see-touch-feel real estate mindset.
Innovators and laggards
As a venture capital firm focused on investing in technologies transforming how we experience physical spaces, we had to be mindful that our network likely comprises a disproportionately high number of innovators and low number of laggards. This meant reaching beyond our immediate network when conducting qualitative interviews. This led to some interesting insights into the rationale of laggard-type behaviour, including the perceived need to protect established real estate brands and the prioritisation of core business activities over experimenting with early-stage innovations. For those who better aligned with the classification of innovators and early adopters, however, one of their key benefits was the ability to influence a product which could also serve as a cost-effective alternative to an in-house team of developers (see below graphic). Others included brand consistency and brand building; time and/or productivity savings; competitive advantage; collecting and analysing data to inform decision making (including sustainability); as well as increasing revenue.
What makes a successful PropTech deployment?
A number of insights emerged from our research, all of which you can see in the report. I’ve included a few below.
A successful trial: when adopters are contemplating whether to adopt an innovation, the process can be helped by the availability of a trial (or pilot). Real estate and PropTech are no different — with trials being used in nearly all cases. The key motivation of an adopter in trialling a product before making a firmer commitment was to ensure it did what was promised. This is a helpful insight for PropTech entrepreneurs: over-promising will likely come back to bite you.
Vicarious trials: trials aren’t always possible. An example we use in the paper is Generation Home — a PropTech firm in the mortgage lending space. According to co-founder Sophia Guy-White, conversion rates are highest when customers have been referred by friends, family or other trusted acquaintances. In this situation, a would-be user or customer is able to trial-by-others through somebody whose opinion they value.
Attitude toward failure: during our research, a pattern emerged among organisations we’d classify as innovators and early adopters: they didn’t frame failure negatively. They consider failure a natural part of the growth process, and innovators within the organisation are encouraged to take measured risks and ‘fail fast’ when appropriate.
Achieving buy-in from end users: our research also shed light on the distinction between decision makers and the intended users of a new innovation. In real estate organisations where deployments were routinely successful, end users were included in the process either through consultation or more actively as the innovation’s champion. An excessive top-down approach to deploying technology had limited efficacy.
If you’d like to learn more about our work on technology deployment, check out our white paper PropTech deployment and implementation.