Last week, I had the privilege of attending the Future Proptech conference in London for the first time. It was by all accounts the best one yet – and that doesn’t surprise me.
The conference, now in its fifth year, was packed with the people you’d want to speak to – from American VCs to European start-ups to the traditional property guys.
Gary Chimwa, founder and CEO of Future Proptech, opened the event saying that the proportion of “property” and “proptech” delegates was almost equal.
Finally, these two worlds are actually speaking to each other – and wanting to speak to each other (I had more meetings booked from 8:30am to 5:30pm than I could have imagined just a few weeks ago – although I did find time for a presentation about PlaceSense along the way).
In a blog post after the event, Duke Long called it the best Future Proptech yet. “I’ve said this for years, whoever figures out how to bring all of the #CRE and #PROP #TECH people together with their actual users and investors will absolutely own the planet and I think, wait, bullshit I know that just happened right in front of my face,” he said.
So in the spirit of sharing ideas, I collected a few thoughts from conversations throughout the day. What do you all think – what do you agree or disagree with?
“I want to get to the point where people stop talking about proptech as this separate thing, in that it almost doesn’t exist”
– Andy Pyle, head of UK real estate, KPMG
When I asked people what they expect from the future of proptech, some variation of this answer popped up loads of times. What Andy means is the property industry needs to, in the next few years, get to a place where “there is no ‘prop’ without ‘tech’”.
It seems obvious, but change is slow. The industry is a complex one with competing incentive structures. While change is happening, parts of the property industry have not yet fully embraced the potential of technology.
There are things proptech can do to help that transition, however, which brings us to point two.
“The way you sell your product to the property world has to be correct in a language that they understand.”
– Rosanna Lawn, acquisition and development manager, Yoo Living
Great, we got all the players in the same room. But it doesn’t help if everyone’s speaking a different language.
We in proptech have to learn to speak property’s language just as much as property needs to learn to speak ours. Darryll Colthurst, director of innovation at Palmer Capital, said he’s found time and time again that companies don’t understand demos unless you use their data and their assets to demonstrate it with. “That’s the key thing: if you’re going to come in, know the business, give them a demo and make sure it’s specific to that particular business, otherwise they just don’t get it.”
We need to make a conscious effort in the terminology we use and how we explain value/valuations of intangible assets to an industry used to physical ones. Otherwise, like Rosanna Lawn told me, you might be left with a product that’s perfect in every way but no one will know what to do with it and you’ll be ignored.
“From an adoption perspective, on country by country basis, I think in many ways Europe is ahead of the US.”
– Elie Finegold, entrepreneur in residence, MetaProp NYC
There was a real debate about the US and European markets at the conference. On one panel of US VCs, there was little question about the US proptech market being two or three years ahead of Europe, particularly in terms of investment levels.
That does have its advantages, though. Roelof Opperman, principal and co-head of investments at Fifth Wall, argued that Europe, which is catching up, can learn from US mistakes.
But Elie wasn’t quite as convinced by America’s supremacy. He told me: “I have always found that our European counterparts were often better and more aggressive and more thoughtful about adopting new technology.”
The problem for Europe is that it’s such a fragmented market – doing business in Germany is not like doing business in the UK, which is not like doing business in France – so scaling is more difficult. That’s why, in Elie’s experience, European proptechs have a tendency to move to the US and expand there because scaling is (relatively) more straightforward.
What will proptech look like in five years? Consolidated.
Walking around the conference gave a small glimpse into the massively varied world of proptech: there are now thousands of start-ups solving thousands of issues. But Elie Finegold, in our endlessly insightful conversation, said he expects M&A to start re-shaping all that in the coming years.
“Right now you have a lot of people selling point solutions – they do one specific thing along the value chain,” he said. But consolidations through M&A or through PE firms rolling up start-ups will mean “they can start selling in multiple points across the value chain in connected ways.
“That will allow them to get more leverage on their sales efforts, drive down the customer acquisition costs and create faster scaling.”
In short, tackling some of the challenges others mentioned above.
Property is making progress, they swear!
“12 months ago, we were one of the first institutional real estate owners to kick-off an innovation strategy and build a team around it, but now most groups are thinking very seriously about how they set up some form of better coordinated innovation structure – if not a team then at least what a strategy might look like.” That’s what Jack Sibley, Nuveen Real Estate’s Head of Innovation said to me.
And the general consensus was that property will (hopefully) embrace that same attitude widely in the next five years, if reluctantly.
Darryll at Palmer Capital said he hopes to see property really take this space seriously in the next five years. What does that entail? “They may not have had to hire a CTO, but actually giving someone a full-time role to be focused on looking at how they transform their business.” He hopes this won’t just be seen as a “line item expense” but as something that will seriously enhance business revenue.
If Darryll’s dreams do come true, proptech needs to be ready to match that progress. As Future Proptech showed, we’re growing as an industry and we’re growing closer to traditional property. Just as PlaceSense is finding solutions to detailed insight creation while retaining the highest levels of privacy, others are finding solutions to other challenges within property. But can we keep that momentum going and can we address some of the issues above?