Part 2: Watch out, they will come.
PG. You’re an avid watcher of the Prop Tech market: can you share your thoughts on what’s out there?
NR. Right now we're not seeing the biggest or the best. Those businesses aren't yet created. Why? For me, Prop Tech is in its first cycle, where you've got complementary systems like Valve and Insurami who are improving existing processes, or making them more efficient: but the truly disruptive mega goliath businesses will come in the second cycle. Right now those super disruptive businesses would never get off the ground because they've got nowhere to plant a seed; they can't get in to a big organisation, so they can't get into the market.
For context, if we were talking in digital terms, there's probably a Yahoo, Lycos and eBay equivalent out there, like in the mid to late 90s. But the Googles, the Facebooks, the Amazons; they have not yet arrived. I've not yet seen any of them, but they're coming. This is exactly what VCs in Silicon Valley want to see, they want to see disruption. It's the mindset.
PG. Is this a threat to prop life as we know it?
NR. Short answer, yes. I think this is where the agency world needs to start collaborating more. I think the biggest shame would be if you get a CoStar, Right Move or equivalent just dominating the market. They just push everyone else to the edges and then all the agents, all these people with jobs, mortgages, school fees, dreams, retirement plans will get pushed to the edges too.
We’ve been here before after all. Once Google and Facebook got to such scale, they sucked all the oxygen out of the room: there was no room for anyone else. They take almost 90% of the ad spend and 3,000 companies are left scrapping over the 10%. Imagine today, Right Move and Zoopla taking 90% of all real estate transactions.
PG. Is there a lifeline?
NR. Yes, this issue is what Valve is setting out to resolve. We're about distribution, not the centralisation of power and data. This helps everyone in the market work more efficiently, like Hedge’s business model, using data to help clients make informed decisions and ensuring we cover 100% of occupier demand – you become known for executing a concept really well, you become that expert in that market, you can use Valve for distribution and additional deal flow, but there's no Right Move being created. No one gets to be the Right Move or Zoopla.
PG. So let’s go into Valve in a little bit detail. Where did the idea come from?
NR. The idea for Valve is an amalgamation of a few paradigms that exist today in Martech and Adtech, and to some degree big data. The idea came about after my foray into the Clerkenwell Fora which I was just blown away by and it set a fire off inside of me: I just had to go and understand this market. I ended up speaking to WeWork and the problem they, and others, have is the way in which content distribution takes place.
WeWork produces new photography and new copy about new amenities, but it's not distributed to the broker portals and agency systems. There were huge amounts of friction and everything was done manually, so I said why don't you give all your content to Valve and we’ll handle the distribution to the brokers and agent partners you want to work with. And that is a content distribution model.
PG. And how have you found rolling out the idea, finding the vectors that you mentioned earlier.
NR. As I said before, before my understanding of real estate was that there was a lot more technology than actually existed, so the early idea for Valve was actually just APIs and distribution. Then when I started talking to people, I established they don’t even really have APIs. With no API there's no way for them to even ingest this content as they can’t even use it: it may as well be a fibre optic cable into their head.
PG. That would be the second cycle in Prop Tech.
NR. Exactly! This slower adoption informed the application you see today: the maps, the interface, the tools and workflows. We realised that we would have to build all these additional layers on top of the data in order to activate it in a way that's productive and useful for our agents, but also efficient for We Work. Ultimately, we had to do a lot more tech than we initially planned to.
It comes down to the fact that you can't buy something you don't understand. That's why Valve has got these pretty interfaces now because everyone can understand it. I can a reflect the market, I can add those buildings in, generate my reports and it looks good. But I think the future for Valve is where companies like Hedge build their own proprietary applications and take in Valve’s data along with other data sources you’ve got to work with and that’s where you’ve got your own proprietary stack of tools. Your own IP. That's the future.
PG. So where will the second cycle will take us and who are the players?
NR. Generally, these cycles are about three to four years. I would say we're probably just coming up to one year into the new cycle. So, this cycle right now it's about these complementary support systems with tools like Insurami or Valve to help people work more efficiently and more productively. But the really disruptive ones, the death stars potentially will come in in the second cycle. It’s unlikely to be an existing tech company out there, and I don't think it will be Google or Facebook entering this market. But it will happen.