Proptech Weekly #48 — Fantasy Proptech M&A: Easyproperty

NOVEMBER 16, 2016 | Rayhan Rafiq-Omar

Friends, Feudal Landlords, Commoners,

The story of Zoopla’s rise is one that fascinates me. Very few people attribute the success to the M&A (mergers and acquisitions) activity that created the UK’s second favourite property portal (by virtue of buying up or merging with all the others except Rightmove).

The burden of innovating was left to Rightmove, with Zoopla content to wait over a year to implement new functionality like ‘draw-a-map search’ and ‘real-time’ data uploads. Would you believe in 2016 Zoopla is still not a ‘responsive’ website?

It would be unfair to say categorically that Zoopla hasn’t innovated. They are the masters of SEO by repurposing Land Registry data as an endless stream of web pages for Google to crawl. And of course their advertising has been a country mile better than Rightmove’s — they veritably own the word ‘Smart’.

But the true innovation of Zoopla Founder and CEO Alex Chesterman has been deal-making. The UK hasn’t seen anything like it since Martin Sorrell amalgamated the best advertising and marketing agencies under a company that is named after the Wire and Plastic Products (WPP) it was originally formed to produce.

Zoopla made it’s start wanting to end the pain people felt when buying and selling homes. They wanted to be an online agent with Alex Chesterman’s first press release in 2007 referencing all the pains in the market they would solve.

But when they subsequently pivoted to being a portal offering pay-per-lead, and then pivoted again to a subscription model after acquiring PropertyFinder, no-one bemoaned the loss of innovation. Instead they cheered the champion who would save them from Rightmove’s dominance and fee rises.

Fast forward to 2016 with umpteen acquisitions — including Globrix — and the merger with Digital Property Group, Zoopla had created a clone of Rightmove. Equity analysts covering the stocks of Rightmove and Zoopla have shown the uncanny resemblances of the websites in their reports to investors.

Zoopla had created more than a billion pounds of value, without creating anything substantially new. This is the power of dealmaking. What we commonly call M&A.

In the new year we will launch a new section for Prop/Tech Weekly posing both my and your thoughts on fantasy M&A deals that could create value or just be fascinating to think about.

This week I’d like to focus on Easyproperty.

Easyproperty is due a hostile takeover.

Rob Ellice driving around in his Ferrari is making a mockery of the Easy brand.

There’s no innovation, no customer value proposition. Just a tonne of investor cash being spanked on what has consistently been a mediocre effort to build market share.

Want proof? Even the about page is focused on Rob Ellice and cars: https://easyproperty.com/about

Note: The page was subsequently changed, but here’s the original:

Maybe he licensed the wrong brand off Stelios?

Rob has been excellent at raising capital for the company — most recently tens of millions from Toscafund.

Before that money runs out, the Board should take over the reigns and acquire genuine technology to give credence to the Easy brand.

The candidate I have in mind has amassed incredible market share, been run frugally and offers genuine value to its landlord customers and tenants alike.

This company is the only online agent that isn’t spending silly money on a call centre — all because their technology actually works.

Easyproperty should acquire Openrent.

The founders of this modest but fast growing online lettings agency have the right attitude to building a technology business that can both scale and be profitable — yes, you heard that right: these guys make money.

But I wouldn’t stop with Openrent — if you’re going to replicate the reverent Chesterman, then one acquisition just simply isn’t enough: Viewber would be a quick deal for both the management talent as well as the technological concept of turning every negotiator into Uber style self-employed agents.

Easyproperty would quickly go from unprofitable and searching in vain for a business model, to a company both the industry and consumers could talk about excitedly.

But why stop at two acquisitions when three is very much the magic number. And this time I’ll give you a menu: Acaboom, Apply.Property or Callwell.

All three have technology to help agents win more instructions. This credibility in front of vendors and landlords will provide the platform for a business that can empower a long tail of highly rated agents to provide a quantum leap better service than anything else out there. And all tied to the Easyproperty brand.

Note: I’m a minority shareholder in Apply.Property