MetaProp NYC’s Aaron Block sat down with Paul Unger at MIPIM PropTech Europe in Paris to talk European expansion strategy, “naïve” views of blockchain and property’s “appalling” adoption of technology.
What sort of areas are you looking at with the second fund?
We hunt proactively, and we have a front seat at the movie for the closest and most exciting innovators. So, some of the areas we’ve bet on recently that we’re really excited about is energy transformation, we like that a lot. Obviously, that’s a huge issue in property. 3D printing is something we’re really interested in. The data plays. Blockchain is something we’re really interested in. These are all buzz words but they won’t be three or four years from now.
It’s interesting you mention blockchain as there’s a lot of cynicism about that technology right now. A lot of people are sick of hearing about it, arguing it doesn’t have any inherent value, it’s not tied to anything.
That’s naïve. That’s a joke. Anybody who says blockchain has no value is out of their mind and will be wiped out over the next three to five years. The fundamentals of how we build businesses, forget about real estate, the property business will be based on the fundamentals of a decentralised ledger and blockchain; the way mobile is now the way everybody does business. You know, first it was the web, then it was mobile, blockchain will be the fundamental building blocks of the future for everybody’s business, forget about property. So, someone who’s not paying attention to Blockchain is a dinosaur for sure. Now, is it going to change what they do over the next 24 months or 36 months in the way a practitioner in the real estate and property business does their job? Probably not but to not understand how fundamental a shift to decentralisation is and blockchain and tokenisation even, how payments are going to work, and not be paying attention and watching the petri dish as the experiments play out, is naïve and I would say fairly sad that folks who take that kind of snarky position.
Having been based in Europe for eight years when you worked for Cushman & Wakefield out of Moscow, will MetaProp have a dedicated European fund one day?
Yeah. We’re increasingly doing more operationally in Europe. We run three acceleration programmes with Columbia University. One of them is called The Bridge programme which brings European, Middle Eastern and African startups to North America. Some startups have grown in their home market, call it Finland, call it UK, call it France, and have to decide where the next market is they’re going to tackle. Some of them say ‘Hell, why stay in Europe? Or EMEA? Let’s shoot the moon and go to the big market of North America, or the United States primarily, and build our business there.’
Those folks haven’t had a lot of tools, haven’t had an easy transition so we created an accelerator programme really focused on those startups. So that was our first toe in the water this year and to doing more operationally here. Over time, as our business gets more sophisticated, as we move into Fund 3 and Fund 4 in our strategies, evolved with the industry’s evolution and dynamic, I can imagine over the next three to five years that we will have geographic-specific funds and investment as well as sub-vertical funds and investment.
I don’t think we’re quite ready to move into a construction tech dedicated fund yet but we certainly are very excited about what’s happening in the construction space, all of the technologies – services, software and hardware that are driven by technology that are happening there. So, over time, there will be specialisation in addition to the top generalists. There are a few out there who will be top generalists but then there will be specialist strategies and leadership and space. Hopefully we have a seat at the table for some of those as well.
It’s still hard to find commercialisable investments where you can make money, right? The key is you’ve got to remember to return money to your investors. It’s fun to raise, talk about raising funds, it’s fun to actually raise a fund. It’s another thing to make investments and, even a layer below that, you have to return money to your investors so this is not a game for the meek. This is really hard stuff.
How would you rate the sort of adoption generally amongst the property companies themselves?
It’s appalling. It’s appalling but it’s so much better than it was 12 months ago, and so much better than even 12 months ago was relative to 24 months ago so it’s still not where we need it to be in order to be successful venture capitalists in the space and to help startups grow, which is really what we’re best at – we’re the early stage guys. So, you need a lot of adoption to allow the start-ups to get a chance to commercialise. They need customers and they need support. They need feedback on their product, even before meeting customers and on the consumer side, we’ve got consumer businesses not just enterprise businesses. Those consumer-facing businesses need journalists who are interested in the technology side of real estate. We started from a very small base. The growth has been phenomenal but, if you were to take a step back and look at it from 30,000 feet, it’s appalling how little adoption there is but it’s getting there and it’s coming fast.
What needs to happen to accelerate that adoption?
More of the same really. We need the generational change at the top of the traditional real estate organisations. I think that’s a major trend that will continue to happen. The old guys get older and the young guys are coming into power and the people who are used to doing everything on their mobile phone either are increasingly the norm at the C-suite of these larger, more traditional real estate organisations and that naturally will lead to more change. Number two – we need more wins, we need more, you know, Purple Bricks and OpenDoors and Zillows and VTSs of the world. Who are getting the funding and having the realisations and making money for their investors. Why, you ask? Because that will bring more venture capital. Why is that important? Because that will breed more entrepreneurship. Why is that important? Because the entrepreneurs are the ones creating the new solutions. The innovation does not happen inside of the large organisations. Innovation happens at the startup level in every industry. Open innovation is really critical so it’s this virtuous cycle of change and cultural transformation that we’re in the middle of and right here, coming to an event like this, you get a front seat to the change.
A couple of years ago there was yourselves, there was Pi Labs in Europe. Now it seems every week there’s another fund. Are there enough startups and entrepreneurs with good ideas for all this VC money to find a home?
It’s a $30tn industry that has been sleepy and well behind its peers and its cousins in financial services, for example. We’re five to seven years behind. In New York alone there are more than 10 fintech accelerators, just in New York City alone, right, and London has to be about the same. So, you can imagine that, in a space as big as real estate and property globally, there is going to be room for a lot of winners.
There are lots of people announcing funds, lots of people incubating and accelerating and that’s going to be the norm. The key is to sort through the noise and figure who’s got the right plan, who’s capable of executing on the plan and who can sustain over the long run. Almost like every other aspect of life, you know, this becomes less about a land grab and more about a quality play. That’s the next couple of years here because it is, you’re right, it is getting noisy in Europe – less so in North America. You can go to three proptech events a week in the UK, that’s too many.
When you’re signing on the dotted line, what do you say to the companies you’re backing about what’s expected for the exit?
Well, we’re early stage guys so it doesn’t exactly work like that. The conversation is more about ‘You’re a great entrepreneur, you’re solving a huge problem, you’re onto something here, we want to support you along the way and we bring a lot of weapons to the table to help you make those decisions at the right time’ because nobody, at the early stage, knows what their exit is going to be and nobody should be focused on their exit. That’s an exercise to humour investors. It’s not an entrepreneur’s concern.
Let’s build a great business and the rest will come and that’s really our perspective – helping these entrepreneurs. We’re business builders. That’s what I’ve done my entire career. We take what we’ve done and the access that we have and the aggregated interest through everything that we do across the world and bring that to bear to help the startups grow.
What advice would you give to a startup reading this?
Be the best at something! Be the best at something. The world is too big, too competitive to throw a bunch of words out there and to not execute better than anybody in the world at something… and you’ve got to pick your niche. You’re better to start really, really narrow and expand from there than try and be everything to everyone. You see a lot of that, a lot of entrepreneurs who ‘Oh I’m going to be everything for IoT’, or I’m going to be the data play for everyone… well the reality is that ‘No you won’t.’ Just saying that, I can tell you, looking you in the eye, ‘No, you aren’t’. So, you’ll get there to the point where you figure out what your speciality is but, the faster you find what makes you uncommonly great and uniquely qualified to be best of the best of something, is where you’re going to find success. That’s my experience speaking.