Proptech and the impact it is having on the property sector
Ahead of our ‘Connecting People to Property in the Digital Age’ event we interviewed our keynote speaker, Antony Slumbers, on the emergence of Proptech, the impact it is having on the property sector right now and how property companies can use data to improve the customer experience.
Can you give an overview of the property sector in relation to the digital revolution – why do you think this sector is so late to the digital party?
Ernest Hemingway, in his 1926 novel ‘The Sun Also Rises’, wrote this snippet of dialogue: "How did you go bankrupt?" Bill asked. "Two ways," Mike said: "Gradually and then suddenly". And much the same could be said about digital adoption. Not a lot has happened for years and then, suddenly, as if a light has been turned on, everyone is jumping up and down saying “What do we do? What do we do?”. The property sector is definitely one of the laggards, but to be fair the wider business community has not really adopted digital as much as the property sector thinks it has. Just look at the national productivity figures: the UK underperforms by 16% the other six members of the G7 group of industrial nations.
What the smarter companies have realised for some time, and many more are suddenly waking up to, is that digital technologies are enabling them to be not 10% more productive than their peers, but 10x as productive. Look at the per employee revenue of the best companies and they are an order of magnitude higher than the average.
For example, WeWork, which is just seven years old, raised its last round of funding in the summer at a valuation of $20 billion. Compare that to the average performance of UK listed property companies. There is no comparison. The digital revolution fundamentally changes the rules of engagement and will allow companies to thrive as much as it will destroy companies.
How are the Proptech start-ups challenging the traditional models?
Technology in general, and Proptech as a subset, needs to do one of two things: Remove Friction or Enable Discovery. Remove Friction in the sense of making anything as easy to do as is possible, or desirable and Enable Discovery in the sense of providing people with exactly what they need, be it functional, social or emotional, at the exact moment in time that they need it. Property people like to say that “people buy from people” but that is an old world, analogue way of thinking; in a digital world people buy from people that make it easy to buy from them.
Across the board the good Proptech start-ups are providing the tools that enable companies to remove friction or enable discovery. The property industry, as historically configured, is a hard business to do business with. Everything is slower, harder, more costly than it needs to be.
Who/what will survive, who/what will fail? Are there any obvious Kodaks and Blockbusters in the property world?
We are in an almost post consumer world where we are much less bothered about accumulating more “stuff” and much more interested in being provided with services, experiences and ephemeral pleasures. So you have Spotify for music, Netflix for DVD’s, Uber for cars and Airbnb for hotels. As a society we are moving from a world of Products to Services, and Ownership to Access. So who will win or lose? Those companies that can provide us with great services and that offer us great user experiences will flourish. Those companies that just want to sell us things, in a one off transactional manner, are doomed.
The Kodak’s or Blockbusters of the property sector are those incumbents who provide us with a bad user experience. And there are many of them, both big and small. Ask anyone who has tried to buy or rent a property, the list is large.
A deep commitment to leverage digital technology, allied to an equal investment in developing human skills, will enable the best companies to build a giant gap between their services and the average.
What digital technology will have the greatest impact on this sector? How can companies prepare?
There are five mega trends in terms of technology: mobile, connectivity, the cloud, the internet of things and artificial intelligence and robotics. All are important and they feed off each other. The starting point must be that all your staff have an excellent smartphone and laptop, they should have as fast connectivity as you can provide them with and all the data and systems they need to use should be cloud based so that they can access what they need when and where they need it. That alone, in the property sector, would set you apart, and is not frankly that hard to achieve. Thereafter getting to grips with sensors, data and artificial intelligence will be the next big divide; these are tools of real power that do require effort and application to understand but that will enable the provision of services hitherto unheard of.
Bear in mind though that advanced technologies do lend themselves to ‘winner takes all’ markets so being left behind could prove very costly. Invest in quality advice.
What role will data play in improving the customer experience, understanding customers on a deeper level/working smarter?
Many people in property shy away from data, as being all a bit too geeky for them. But data does not make you inhuman; it allows you to be more productive, much more productive. Why are Facebook and Google so successful? Because they know a phenomenal amount about each of their billions of customers. Mass marketing was a necessity in an analogue world because we knew very little about our customers and had no way to market to them as individuals. In a digital world you can deliver personal service, at scale. In an analogue world we talked AT people, in a digital one we can talk WITH people.
A skilled and well trained individual, without digital technology, can provide the most fantastic service to customers, but only a few of them. With digital technology that one same person could provide fantastic service to a large number of people. It is the basis for being 10x better than before; using technology to allow you to provide the best service to 10x the number of people.
Underpinning such service though is data, and it is vital you understand the four V’s of your data: volume, variety, velocity and veracity. What you have, how much of it, how fast it is amassing and how accurate it is. You build great services on top of great data.
What is your vision for the future of this sector?
I am enormously positive about the future of this sector. The built environment impacts on every single person on earth, all the time. We have the opportunity to make it so much better, for so many more people. Today, much of the industry and many of the places and spaces we work, rest and play in are not that well functioning, or designed, or conducive to pleasure. I see the challenge, and opportunity, as being improving everything about everywhere. We do have the tools to do it.