Proptech Weekly #60 — Fantasy Proptech M&A #3: Helping Countrywide spend £38m
MARCH 13, 2017 | RAYHAN RAFIQ OMAR
Imagine a hypothetical scenario where the largest company in a sector undergoes a slow motion car crash in plain sight of their peers and the public markets.
No, I’m not talking about IBM, or Microsoft during Steve Ballmer (the guy that wrote off the iPhone in 2007).
The focus today is on Countrywide, the UK’s largest estate agent by number of branches.
The industry has had a good guffaw at the expense of Alison Platt, CEO since September 2014, and her ‘retail’ strategy.
The recent news that the company placed shares and raised an additional £38m so that it could ‘do a Purplebricks’ with a digital strategy seems to be an admission the retail strategy has failed [http://www.countrywide.co.uk/media/59647/launch-announcement.pdf].
A shame really because shareholders have been suffering during this recent period of change:
In the announcement under the heading ‘Use of proceeds’ they state: “The net proceeds of the Placing will be used to accelerate Countrywide’s digital rollout.”
They go on to say – in a section titled ‘Acceleration of digital rollout’ – that Countrywide’s digital platform has been rolled out to 208 branches and results include “increased website traffic and increased leads relative to retail brand websites”.
Who on earth visits Countrywide’s website? There is literally zero reason to do so.
And has anyone actually seen what this new digital platform looks like or does? Or why it will cost an additional £40m or thereabouts?
But first, let’s hear from the CEO:
“We are pleased to announce our placing today. This allows us to continue the accelerated roll out of our digital propositions and further unlock the path to our multichannel network.”
Does multichannel means they go the full purple and close down all their physical branches? Or is something else going on here? From a CEO who is supposed to be a plain-speaking Mancunian, it would help to get a plain spoken explanation.
They use the words “run rate savings” and “cost transformation activities”. Apart from staff and rent, what costs could they get savings from?
Well, this ad might point to the future of Countrywide under Platt:
There then follows this message and map.
What this tells you – apart from my battery being low – is that Countrywide does not understand how the internet works and breaks down geographic boundaries.
Worse, when you put in an Austin & Wyatt office address to give them a postcode they can accept, there’s just a contact details form. There’s literally no tech here, folks.
There’s a faint whiff of deja-vu about all this:
– Countrywide founding Rightmove and losing control of it (take a bow, Harry Hill);
– Countrywide seeding Zoopla’s challenge to Rightmove and rather than building their equity stake in Zoopla (a fast growing company) the board and CEO decided to sell their stake in Zoopla just as Alex Chesterman was beginning to grow earnings through acquisitions.
It doesn’t have to be this way. Here’s something the public markets haven’t been clearly told: Countrywide owns 20% of Propoly.
Yes, Propoly hasn’t launched fully, but it is a beautiful piece of software for landlords to self-serve lettings and management. Have a look for yourself: https://www.propoly.com/
Propoly’s CEO Ed Ghazal is a former British Land staffer, so would likely be comfortable operating inside of a large corporate.
If Countrywide’s board is serious about its digital strategy, it should defer to people who know how to build technology. And if they own part of a company that does this, starting Propoly would be sensible. It would certainly cost less than £40m and work better than the current ‘accelerated digital rollout’. Just a thought.
Are Britain’s homes built badly?
It seems the answer is yes. The Guardian puts the boot in with this article:
https://www.theguardian.com/money/2017/mar/11/why-are-britains-new-homes-built-so-badly
Why does this matter? The Government is on a big push to promote modular house building. If we can’t build properly, let’s do it differently.
The likes of Legal & General – who have a modular homes factory in Yorkshire – expect this technological method to reduce the cost of building homes and improving their energy efficiency at the same time.
All I can say is good luck because Brits tend to still prefer buying and living in homes built before 1930. There’s probably good reason too. The image of ‘prefab’ homes still haunts many in the property industry.
From skateboards to lettings
There’s a company taking New York by storm. It’s called Nooklyn and it’s run by Harley, a guy who openly admits to failing with his previous venture selling skateboards.
But in the US, trying and failing is good. The scars are seen as a sign of experience and lessons learned. Amen to that!
Harley went on to be a ‘superintendent’ in a block of flats – he describes it as the guy taking the ‘garbage’ out. Here he met Joseph who was making over $10k a month renting out apartments.
So Nooklyn started out as a simple blog that advertised apartment listings in Brooklyn, adding the edginess of skateboard culture to attract a loyal audience of renters.
Before long Harley had 150 people working for him that had collectively let over 11,000 apartments.
There’s nothing amazing in reading this story. But seeing the beautiful way Harley presents properties and his brand, makes people want to visit his website first: https://nooklyn.com/
For those who think there’s nothing special about Propoly, I would point to Nooklyn and say that people like and gravitate to beautiful things marketed well.
Unionising renters
It seems that regulation on landlords keeps getting tougher. You’d think renters would forgo the costs and hassles of owning property and lump all the responsibility on a landlord.
But speak to most tenants and they’d be shocked if you described any of the many rights they have over their landlord.
And that makes sense. A renter’s only engagement with property is their landlord or lettings agent. They have no independent representative or Government providing advice on their consumer rights.
So in steps Faisal Khalid and Renters Union: https://www.rentersunionlondon.com/
The service today is minimal but simple to use: upload your tenancy agreement and they’ll highlight pitfalls and provide some advice. They’ll even write letters to landlords and managing agents on a tenant’s behalf.
What’s special about this service is that it is (or initially pretends to be) automated. There are only so many things a tenant can complain about. So why not teach a machine to do the ‘lawyering’ on behalf of tenants?
If Artificial Intelligence is to be the next revolution and reduce many jobs to the scrap heap, estate agents can pause for a sigh of relief as technologists focus on lawyers and doctors first.
It’ll be a while before robots can take people on viewings and negotiate prices. But it’s absolutely possible to produce standard letters or triage someone’s common ailment with a few inputs on a screen.
Personally, I welcome Skynet and our eventual machine overlords. It’ll give me something to resist and write about.
