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In the first few episodes of this series, we focused on PropTech founders’ motivations when choosing the #StartupLife. It’s not an easy path to follow, especially in real estate. We’ve seen the good and the bad… and today we will explore the ugly. I asked several startups to share the biggest barriers they faced in building and scaling their businesses. Unsurprisingly, many pointed to resistance to change within a very conservative industry as the single biggest obstacle. Read on to find out what these founders are doing to break the mold and disrupt the world of property!
Mike Bristow, Founder of CrowdProperty: On the lender side – building a trusted brand. We needed to build an online proposition from scratch that retail lenders would invest their money in. On the borrower side – landing disintermediation. In a brokered market, we disrupted the value chain, uniquely sourcing projects directly, thereby minimizing the value chain profit pools and maximizing the value offered by CrowdProperty to both borrowers and lenders. Within the business – building a great team. It’s all about people, people, people. Beyond specific technical roles, I’m a believer in getting good people into an early-stage business and letting them flourish at cracking the many things that need to be dealt with, motivating them well along the way.
Taraneh Nasseri, co-founder of RightCost: Getting noticed amongst the big fish has been the biggest hurdle for RightCost. Consumers are still very heavily influenced by the big players who spend big dollars on marketing and advertising rather than doing their own research to make sure they are getting real value from the service they are paying for. This is an obstacle we are still trying to get through.
Markus Asikainen, Co-Founder of Exquance Software: We’ve always raised very little external money while our clients have been the largest companies in the real estate and PropTech industry. This was creating a certain kind of imbalance for us in the beginning, because we were financially quite weak and large corporations had to accept that fact signing a deal with us. Therefore, we had to find corporations which were willing to take some risk and deal with a young startup. We’ve also been in the position a few times where we were financially “dead”, thinking about which employees to fire first before running completely out of cash. In these situations, we worked like crazy to find quick revenue, and due to hard work (and maybe some luck too), we’ve managed to keep the business alive and never had to downscale our operations.
Matthew Partridge, Founder of Infabode: There were huge initial challenges that we managed to overcome, with companies not wanting to hand over their information, despite it often being publicly accessible on their website. As property technology became more widely recognized and the value of data sharing grew, there was a dramatic increase in the number of partners Infabode gained and now we have most of the world’s leading real estate brands. We have worked tirelessly to create these fantastic partnerships with companies such as NAI Global, UBS, KPMG, Colliers, Knight Frank, AXA, Savills, JLL and many others, to create a valuable resource platform for. We still get some push back from the bigger corporations but we are positive that eventually, they will all share our vision for the industry.
Jonathan Liemann, Co-Founder of Mietwise: Real estate is traditionally a close-knit industry, and as two English-speaking Co-Founders in Germany, trying to break into it can often prove to be challenging. This is further enhanced by the characteristics of the real estate industry, which has notably long operational cycles, high barriers to entry, and which is not particularly known for its transparency. PropTech is also a relatively new sector when you compare it to the likes of FinTech. As such, the same level of public awareness doesn’t exist, with the likes of Revolut, Adyen and N26, instantly more recognizable than some of PropTech’s bigger players. This is definitely a barrier, and once PropTech receives more attention from the end consumer, I believe more established real estate companies will also be more likely to embrace PropTech.
Raymond Chetti, Founder of CRE Korea: The biggest barriers I’ve faced to date have been around educating senior real estate professionals about the power and potential of AI. For example, our team was invited to present at a final pitch competition for the Korea Appraisal Board (KAB), but the judges for the competition were all over 50~60 years old, so trying to explain how AI works was like trying to explain rocket science to a newborn baby. AI is something they’ve read about in headlines, but don’t truly understand, nor want to give the time to understand how it works, nor the implications of it. Sadly, we didn’t win the competition, but we’ve won others where other judges and panels understand the potential and implications of our work.
Corentin Guillo, Founder of Bird.i: The biggest barrier we’ve faced was market education. Because of the innovative nature of Bird.i (i.e. our usage of satellite imagery to track construction activities), we’ve faced a great lack of initial awareness from our customers to the possibilities offered by satellite imagery. The best they had been exposed to was Google Maps and its satellite base map. It took us a lot of time and resources to explain and demonstrate how we can track construction activities from space very accurately and in real time.
Sonny Tai, Founder of Aegis AI: Our technology is very new: It wasn’t possible to build a system that detects weapons 2 years ago. We’ve leveraged improvements in data science, data collection, and especially hardware to build an AI system that outperforms humans. Given this context, the biggest barrier we face is convincing buyers that our system works. This is especially challenging in the face of previous attempts at video analysis in the 2000s that used simpler methods that were greatly oversold, leaving many buyers with lasting negative impressions of video-based analysis tools.
James Morris-Manuel, Vice President EMEA at Matterport (Founded Virtual Walkthrough, now part of Matterport): Today agents and investors can see how technology is transforming the property industry but back then there were very few tech companies catering specifically to the property sector. PropTech wasn’t even a word. One of the biggest challenges for any start-up is hiring the right people. As a start-up, you pay a much greater price when a hire goes wrong than you do in a bigger company. That is something we’ve been very careful about. To me, it is the people that make the business work – get that right and the rest will follow. With a fast-growing start-up, you also have to be wary that you don’t stray from your core business offer. It is easy to get swept up in where things might go in the future but keeping a clear head and believing in your USP is central to growing a successful business.
Connell McGill, Co-Founder of Enertiv: In the early days, it was challenging to convince investors that a business that had a significant hardware component could be scalable. Launching a software company is hard enough. Add in manufacturing, logistics, inventory, installation, project management, and you’ve lost a lot of investors’ attention. That being said, the market has shifted over the last several years. Whereas VCs used to be falling asleep in the middle of our pitches, we’re now receiving multiple inbound investors per week.
Lucas Dickey, Founder of Fernish: We were effectively creating a new market for most of our target (end) customers—and market creation is no easy feat (the allure of blue ocean be damned)! This customer cohort had never considered renting furniture and was completely unaware of legacy offerings in this space (that admittedly weren’t really targeting our customers with their services or optimizing their offerings for our customer). Beyond that, we run a capital intensive business, but we’ve been thinking about that part from day one (okay, admittedly, more like day two).