How to spot a flawed fad
At this year’s EXPO Real conference, the Real Estate Innovation Network, in partnership with PwC and EXPO Real itself, published its list of the 100 best proptech firms in Europe. To get to that nice, manageable final list, 1,622 proptech companies were reviewed in total. That’s right: 1,622 proptech companies, writes Bronny Wilson, UK general manager at tenant engagement platform Equiem.
The thought of conducting a process like that is enough to make most on the more traditional end of the industry break out in a cold sweat. The property industry is aware that it should be engaging more with proptech and yet when it comes to it, the sheer volume of technology firms out there makes the whole thing seem pretty overwhelming. Having to spend too many hours, sifting through too many tech companies, offering too many solutions, with too little time to review them properly, has left a good number feeling overwhelmed, confused and frustrated.
That issue is beginning to be addressed by some. For example, James Dearsley’s Unissu, a proptech database categorising different technology companies and solutions, is aiming to bring a little more structure to the proptech world. But whilst progress is certainly being made, many property firms don’t know where to start with proptech. As a result, a question we are still regularly asked is: ‘how can we (investors, landlords, agents etc.) be sure that we are getting on board with the right proptech company and not simply falling for a technology fad?’
Passing fad or long-term game changer? It’s a critical question, and whilst it’s true that all partnerships have some degree of risk to them, it is possible to make wise, considered decisions when it comes to selecting a proptech firm to do business with.
Whenever we meet with or discuss this issue with the wider property industry, we always stress the importance of asking the right questions of a proptech company seemingly promising the world:
Does this solution correspond to any wider trend?
The property industry lives by its ability to respond to socio-demographic trends, shifts and changes. Build to rent and serviced office space are just two such responses in recent years. A proptech firm doesn’t need to have been born out of such a fundamental societal change as those but solutions should relate to a trend or challenge affecting those within the property industry.
Are vacancy rates up because occupiers are going to buildings with better connectivity? Then a proptech solution that tackles that problem is clearly useful. Are huge queues turning people off the retail in your building? Click and collect or remote ordering solutions help with that. Are your asset management solutions proving ineffective? Data and IoT may help you better understand how occupiers are interacting with your building.
However, if you come across a technology that looks good but doesn’t seem to tackle any particular challenge you or the wider industry are facing then it’s likely just that, technology, rather than a technology solution.
Has this solution proved successful elsewhere?
Don’t be a guinea pig. Another company can take on that role instead. It’s always worth waiting until a proptech has proven itself capable of effecting positive change elsewhere. Don’t move before you have a guarantee that a solution will be worth the capital expenditure. Ideally look for companies that have been going for more than three years and still have their first clients on-board. That is the sign of a tried and tested scale-up, not just another promising but potentially flawed start-up.
Is this solution operationally sustainable?
What good is technology without quality customer service and quality of delivery? A team of two developers can certainly create solutions that are innovative, exciting and even much-needed, but can those same developers sustain that technology across your buildings for the long-term? Again, look for those companies that are tried and tested and have proven their worth across multiple contexts over a consistent period. Beware teams chock full of developers but with no client services experts and customer managers.
Do they have good leadership that understands current market challenges?
If proptech leaders only talk about what their technology can do, without an understanding of any of the wider challenges facing the property industry, then you should question how flexible their solution is. The market will look different in five years to what it looks like at present. If proptech firms bury their heads in the sand and have no concept that they might have to tweak, amend or re-skin their technology to suit the current market conditions at some point, then it’s not worth bothering with.
Look at what a company’s leaders are saying in public, whether speaking at conferences, in the media or simply chatting at industry events. If they have a purely blinkered approach and can only talk up their tech, then you ought to question to what extent they’d be able to partner with you for the long-term across the future challenges you are yet to face.
What does the wider industry say about it?
It’s a simple final point, but third-party verification is a good indicator of whether a proptech firm is the real deal or not. If the only person talking up the technology is the leadership team or those that invest in them, be careful. If however, a firm regularly features in respected proptech reports such as the Real Estate Innovation Network’s Top 100 proptech firms, or is positively spoken about by trusted industry commentators you can be more confident than not that it’s a company worth exploring doing business with.