Why do property people fail with PropTech?
Who here owns a property? I used to, but to fund my business, I had to sell my home. Now, be honest, raise your hand if you thought that was a stupid financial decision?
And that’s why property people can’t do tech: they value property itself much more highly.
Every PropTech entrepreneur wants a successful exit so they can buy more real estate..
To property owners, the ‘free money’ is everything. Property prices just keep going up forever. What else matters?
Most ‘property people’ are, relative to every other industry, not cost conscious, ignorant of efficiencies and focus a lot of time on being fearful of risk.
Technology = risk
The perceived return on capital from property investment trumps that of technology. Ask real estate tech entrepreneurs what they would do on exit: invariably buy real estate.
Tech start-ups are seen as punts, property is safe and prices always go up.
This is why there is next to no innovation in real estate technology. Take a look at what VCs are funding: cheap access to listing online and classifieds websites. If this is the pinnacle of current innovation, I might as well shut this blog down.
Instead, maybe we should understand our archetypal dumb property investor. If you’re selling to people like them, who have no imagination, then you’ve got to adapt your proposition if you have any hope of getting traction.
If you’re building technology for real estate, make it simple.
While 2012–14 has been a renaissance of real estate technology, there is certainly no enlightenment. Most money has backed agents racing to the bottom on fees, with some capital going to payment start-ups.
Here’s hoping there will be more technology on display from real estate technology start-ups. One thing is clear, consumers aren’t impressed and continue to give custom to traditional, local agency.