PropTech’s biggest flaw?

An interesting conversation has been taking place of late, all around the question of: What is PropTech’s biggest flaw?

The always fascinating Dan Hughes has offered his take on the question in this recent podcast and it was also mentioned on the Singer Vielle Google Hangout we recently took part in.

It’s a really interesting question, and I think the very act of searching for an answer could be a valuable exercise. It’s a form a self-reflection, I guess.

First let me say, Dan’s answer to the question is very interesting indeed and he highlights some potentially dangerous traps our industry is heading towards. But, after considering it for a while, a different set of industry inefficiencies occurred to me, a particular one of which I think gives all others a run for their money in pursuit of this dubious crown.

There is certainly an argument for awarding the title to market oversaturation; a lack of consolidation and collaboration is beginning to create barriers to adoption and success. With too many companies offering similar services, parts of the market are growing overcrowded.

PropTech providers have a responsibility to nurture an efficient industry, but so many want a piece of the growing PropTech sector that there aren’t enough niches to house them all.

Thus, we have many companies offering similar solutions, services and products. This is, undoubtedly, a problem, but I think it’s one that will naturally fade, as the weaker of these will inevitably struggle to keep going.

There’s also an argument to be made that PropTech’s biggest flaw might be the lack of open dialogue, as well as mutual understanding between traditional property and PropTech.

There has long been a sense that PropTech is trying to overshadow traditional property practices, and that traditional property, in turn, needs to defend itself by batting away any attempted tech disruption.

This has created an often unfriendly discourse throughout the years, a friction and a distrust. No doubt this is a big problem, but, again, I think it’s one that has naturally started to be remedied.

At MIPIM in March 2018, there were far more conversations between property and PropTech professionals than at last year’s event; really promising, proactive conversations which I have no doubt will result in some fascinating partnerships and help ease the last remaining tensions between tradition and technology.

Instead of creating solutions for the real-world inefficiencies and weaknesses that exist in property, many members of the tech industry are offering solutions to problems which nobody knew existed. Problems which industry professionals know don’t really exist.

I would suggest that this is one of the biggest, if not the biggest, flaw in PropTech right now.

That is to say, some providers are utilising trendy technology to create solutions for what they assume must be problems. But they are problems which those within the CRE industry just don’t see.

How has this happened? Why has this happened?

I would suggest that it’s a case of best intentions getting embroiled with the human instinct to survive, even thrive. I would suggest that the providers who are offering solutions to fake problems did not set out to do so. Instead, they built a solution which they eventually realised was going to be eclipsed by a more established company.

Rather than admit defeat, these companies have pivoted their platform. This moment of realisation, that the solution they’ve created has already been delivered by a competitor, results in a period of panic. A founder who has dedicated months, maybe years, and pools of personal cash to building a company is not likely to give up without a fight.

This period of panic, mixed with an unwillingness to concede defeat, can result in a rushed search for a proactive pivot. Sometimes, this pivot results in great things – when forced to adapt, you can end up somewhere even better than you initially planned – but equally, it can lead to companies having to invent problems that ‘need solving’.

…And why is this so bad?

I would suggest that property professionals don’t have the budget, nor time, to discover that the platform they have just invested in addresses issues that they’ve never even experienced.

If you agree with me that this problem exists in our industry, the question arises, how do you tell the difference between solutions that address real problems and those which don’t? A lot of the property professionals I know, can tell the difference based purely on experience and instinct.

In such cases, they just need to avoid being blinded by the pitch or dazzled by the design. Often in a sales situation, it’s only possible to cut through the fluff if you’re able to demonstrate a greater knowledge of the subject at hand, than the person pitching to you.

Admittedly, it’s easier said than done, but property professionals must rely on the fact they know most about what they do, and ultimately, their needs. It is the job of tech to fit neatly inside that framework, not force it to change.

I’ve based this reflection on the B2B space that Coyote operates in, but what if we look at the wider B2C market? Does PropTech’s biggest flaw affect professionals and providers in the consumer space?

Hmmm…I would argue less so. Consumer-facing services are often more simple and direct. Very rarely are they nuanced solutions; they tend to address obvious issues for mass markets, such as finding property, choosing mortgages, or making tenancies more efficient.

Also, if a product or service isn’t addressing problems that the wider public experience during their interactions with the property industry, they have very little chance of surviving.

This is because the rise of technology has, somewhat ironically, made word-of-mouth more influential than ever. Social media, internet forums, and review websites, have resulted in people placing much of their trust in reviews from their peers. If it’s been good for others, it’s likely to be good for me. And it works the opposite way, too. I’m not going near that because everyone here says it’s not worth it.

So there you have it, my nomination for PropTech’s Biggest Flaw. It’s my belief that only by identifying our industry’s flaws can we start to address them, remove them and avoid their returning.

I’d love to hear your thoughts.