I am often asked by people in the industry, ‘what PropTech should I buy or invest in?’ To which my reply, which irritates those looking for easy answers, is that they are asking the wrong question. What one should be asking is ‘What do I need to know, before I can know what PropTech I should buy or invest in?’ So, what do you need to know?
Who is your customer?
Sounds simple doesn’t it? Well, if you want to create new value and differentiate yourself you maybe need to think about who your customer is differently. For example, in a workplace world where the percentage of people working ‘flexibly’ is growing each year, and ‘Space as a Service’ (no lease, purchased by the hour, day, week or month) is the new normal, who is an office owner’s ‘customer’ ? It’s clearly no longer the CEO or CFO of a corporation.
No, the customer is now the individual, and you have to engage, inspire, interact with and sell to each and every person using the space. For most people in property, this is a new game which requires different tools and a new mindset.
If you are a retail property owner the same applies. It might be your retailer tenant that pays the rent, but really your customer is each and every person who walks into your shopping centre, or store. Retail property owners must own the relationship with visitors to their space.”
Without data, space is just a commodity
Alibaba, through which 90% of China’s e-commerce passes, have recently bought Intime, – an owner of 29 department stores and 17 shopping malls spread across the country. Why? Because they want to get into the real estate business? Absolutely not; they’ve done it because by combining what they know about localised spending patterns with real time inventory from offline stores (many of whom also sell via them online) they can predict and provide for demand in an unprecedented manner.
How does your customer want to interact with you?
When you can book an Uber in 30 seconds, make bank payments from your phone, order anything from anywhere in the world and have it delivered tomorrow, why on earth is any form of transaction in the property world so utterly painful? Why is it so slow, why isn’t the information you need available immediately, why can’t you access documents in a readable format on your phone, and why oh why do you have to wait till office hours to get anything done? There is an abundance of low hanging fruit in this area which is ripe for harvesting.
What part of your job could be done by a robot?
McKinsey say 49% of all tasks performed at work could be replaced by technologies that exist today*. You might not like the answer, but do you know enough about the technologies available today to dispute this? And in your case, is the actual figure higher or lower than 49%? This line of questioning is critical to maintain a forward thinking, tech-first company.
What data do you have access to?
Think of the four V’s of data: Volume, Variety, Velocity and Veracity.
First, Volume – simply how much data are you dealing with?
Second, Variety – how many different data sources have you got? Many of the services coming on stream today are enabled because we now have access to an incredible variety of data sources. Much of the richness derives from combining one source with another, adding context to information, which ultimately frames the commercial relevance disruption needs to latch on to.
Third, Velocity – how fast is it coming at you? Once a day, an hour, a minute, a second, or even multiple times per second. How realtime does your data need to be?
And fourthly – Veracity. How reliable is this data, how true is it? Some data needs to be absolutely accurate: elsewhere you can tolerate a little ‘truthiness’. The digital world is built on data: knowing what you have, what else you need and where you could get it from is essential.
How well do you understand your market and your competitors?
Have you considered that, like Alibaba above, they might no longer be sitting within the property business? You might be being smart in following Wayne Gretzky who famously said ‘I don’t skate to where the puck is, I skate to where it is going…’, but what if the game is no longer Ice Hockey? Kodak wasn’t put out of business by a better film maker- it was the smartphones that got them in the end.
All of the above is what you need to know before you ask about what PropTech to adapt into your business. You need to understand clearly what the precise pain point is that needs relieving, what gains you are trying to achieve, and what is the job that needs doing. You should not touch any technology until you understand what the value proposition is, and how contextually that fits into your core business problems or challenges.
If your job, or big chunks of it, is under threat from robots, what can you do about it? What technology can you utilise, or co-opt, to fight off this threat? How could you embrace the robots, enabling them to augment your skills and make you dramatically more productive than before? The hard fact of the matter is that, when you and your colleagues are competing against the robots, it is not the robots, but your colleagues, that you need to outrun.
These methodologies are de rigueur in tech startups and help you dig deep into your value proposition and business model, and are very useful in answering all the above questions.
Once you get to this stage you should have a clear understanding of what technology (PropTech or otherwise– the nomenclature is not important) you need, and then clarity as to how these new tools will catalyse innovation throughout your business.
The days of IT are over: every business is a technology business. The differentiator going forward is knowing what technologies you can use to complement your human ingenuity, skills and creativity in the service of a robust, solid and scalable business.
Knowing the right questions to ask is a good start.
Read more about PropTech & Innovation in our Insight Report here, A Brave New World? Innovating Real Estate