Part 1: Making lemonade (out of leasehold lemons)
PG. Tell me a bit about your life before discovering property?
NR. My background has always been in Tech and when I graduated with a computing degree, it was all happening: the explosion of new business models and consumer models and technology businesses via the internet. The first area to get disrupted, or enhanced, by the internet was media: publishing businesses, marketing, advertising, so that's why I ended up in Martech and Adtech - the technology solutions used to help companies’ market more effectively or advertise more effectively. I spent 15 years learning the dark arts of digital marketing and advertising, starting as one of the first employees at a Swedish tech company called Tradedoubler, which is still going today. There were about 30 people when I joined and by the time I left, four years later after our IPO, we were nearly 1000 people.
PG: It does seem like it’s been a really exciting journey for you both personally and professionally?
NR. It really has! Sometimes you're in a business, in a particular time and it’s set up in such a way, that it doesn't matter what you do; even if everything's not perfect, it all just turns to gold. We worked hard and we took chances,
but looking back those were the glory days where if you had an idea and you could get a website knocked out, you could build a business pretty quickly because there was just no competition. Google was not even that strong back then, no one really had dominance in the market.
PG. When thinking about marketing buildings, we want our agency model to be about attracting people who want to interact with our content rather than hitting them with brochures, HTML emails & TO LET boards.
NR. Exactly I think it’s specifically thinking about the decision makers of tomorrow. Who’s the guy or girl (probably in their late 20s) that's going to be deciding where they take space and how. They're probably not using Google as much, they’re probably on Instagram and WhatsApp all the time and may be using Snapchat and it's about creating the right content formats for those distribution platforms. Content will need to be image heavy, high quality video. The agencies like Hedge that manage to test those channels, optimize them quickly, and scale will be the ones that can create a very strong position in the future.
PG. What attracted you to move into the property sector with your tech background?
NR. There were basically two big moments. I'd say the first one was being a long suffering tenant; leaving a trail of lease obligations and costs as our businesses rapidly grew and upsized. In Tradedoubler we had this for years as we took a new office every year but we had already signed a lease for seven years on each previous premise. You couldn't just go to a co-working operator and grow and scale in those days, so we got stuck with all the extra real estate costs. Fortunately the company was very profitable and growing very quickly so it was a drop in the ocean. But still, it was like death by 1,000 paper cuts when you look back and see how inefficient it was.
The second moment was when we were searching for a bigger office for Game Analytics after our acquisition by Mobvista. We were looking around Clerkenwell and stumbled across Fora’s building in and I knew in a heartbeat that's this was the future! It was super stylish space, everyone was very well dressed with really good communal areas, high-quality fixtures and fittings. It was everything that you never got in a start-up office, which normally to be fair, are pretty ‘basic’ cramped buildings with no air con. That's just how you build businesses.
So that was it really: the pain of suffering substandard space, those long lease liabilities and then seeing this stunning you space that you could take flexibly without any of the anchorage.
PG. We have to provide what the customer wants; it simple marketing isn't it? In order to ensure that that space becomes income producing and someone sees value in it for someone to buy? That's what we have to do as an agency. It's no longer a case of putting a suspended ceiling in and dropping some LED lights. It's not like that anymore, it's much more thoughtful. It's not a product now, it's a service. Did you also see that the property sector was really lagging behind all other sectors in terms of embracing technology?
NR. Yes and no. Outside looking in, I imagined that there was a lot more technology in real estate than there actually was.
It was the pretence that people had technology or they talked like they had technology, but actually no one had anything.
Once you scrape the surface, and I think about this a lot, there are structural reasons as to why it's difficult to build prop tech businesses. I'll give you some.
Firstly, commercial real estate is a people business. It’s about knowledge of course, but primarily it’s about relationships & networks; so people. But a lot of these people are sales people; they have a revenue target. As a prop tech business we need to find a ‘vector’ within the big organisations of a sector, where a technology solution can matrix in and create value for that organisation. But because you're dealing with sales people everywhere you don't really have a contact internally that's responsible for driving new tech solutions for the business. Whereas media and marketing for example are full of really strong tech people, so there are plenty of vectors and people that are interested to understand what other solutions are out there.
The second thing is real estate moves slowly. It takes time to get meetings and to have meetings. It takes time to do follow ups, so it moves at a very slow pace. I would say from when I had the idea for Valve to getting the first customer live was one year.
To be continued...