Proptech is a word on everyone’s lips and no doubt will change the way the property industry operates.
Since 2011, there has been over USD$300 million in funding invested into Australian real estate technology, according to a report from Unissu, which highlights just how big the sector is becoming.
Proptech covers a whole range of different segments of the real estate market and new start-ups are launching on a near-daily basis.
At this stage in the technology life-cycle, Australia has tech-companies that operate in different segments of the industry with the main areas being agent and property value research, property and investments search, agent and PM services, listings and marketing, and finally exchange, finance, mortgage, settlement and post-transaction.
In Australia, there are already some segments that are highly competitive and dominated by a few key players.
However, there are still many areas of the industry that operate in the same way they did more than 50 years ago.
Many of those areas fall into the exchange, finance, mortgage, settlement and post-transaction, meaning there is still an opportunity for new disruptive technology to improve the way the industry operates.
Co-Founder of off-market listing service Property Whispers, Liane Fletcher, believes the starting point for any proptech startup is solving a problem that already exists.
“The idea for Property Whispers came to me while working as a real estate agent,” Ms Fletcher explained.
“Homebuyers were frustrated as many buyers could not find out about properties for sale off-market (that is properties available for sale that are not publicly advertised) unless they were in touch with every agent in their local area.
“Real estate agents were frustrated as they often could not find a suitable buyer for an off-market listing. Property Whispers solves those problems for both buyers and agents.”
According to Ms Fletcher, there are a few key steps you need to examine before diving into a new start-up.
# 1: Validate your idea – is there a genuine problem and genuine solution?
The starting point for any new business is whether or not there is a genuine problem there that needs to be solved.
Liane says the best way to do this is to validate your idea along the way.
“We tend to convince ourselves that we’re right and that is one of the most dangerous traps you can fall into – make sure plenty of people who would be your customers think it’s a great idea too and say they would use it. Validate your idea at every step before you move forward.”
#2 Know what it is going to cost you to get your idea off the ground
Starting any type of business costs money and when it comes to technology companies the costs are not always easy to determine, particularly if you need to outsource work to programmers or developers.
“Unless you’re a ‘techie” who can write code, there are website and/or app design and build, SEO and other tech costs. Next big cost is marketing. This cost should not be underestimated –the main channels we’ve used are social media and Google ads,” Ms Fletcher said.
“There are also other business administration costs that need to be paid – registering a company and business name, setting up a domain name, legal costs, etc. Budget 10 per cent more since everything costs more than when you first thought.”
# 3: Having the right processes for your technology build and any amendments is critical.
It’s vital to go into great detail in the planning stage and Ms Fletcher suggests you document everything.
“At the very outset, specify your technical requirements in great detail including all design, user and reporting functionality.”
# 4: Test & test again different marketing channels
If you don’t tell people about your business then no one will know you exist. So even if you have the best product in the world that won’t matter.
“Marketing a business today needs a well thought out marketing plan. Initially, we spent small amounts of money to test the different marketing channels to see what works best,” Ms Fletcher said.
“We found PR was the most effective way to reach a large number of potential users to Property Whispers. Getting prime time on Channel 7 or in news.com.au has been priceless.
“We employed a PR consultant initially to launch the business but today we write and submit our own press releases and blogs.
“It is important to submit press releases that are newsworthy and well-written blogs that appeal to an audience.
“Use an experienced social media or Google consultant or, if you’re going to set up paid advertisements yourself, make sure you learn as much as you can about reaching the right audiences.
“It can be very effective but you can also waste a lot of money and time if you don’t know what you’re doing. We used consultants initially during the launch phase and have learnt about setting up ads ourselves.
“The problem is that social media channels and Google often change their algorithms so can be confusing and difficult to know exactly what will work best.
“Spend small amounts of money testing different marketing channels, messaging and formats. When you know what works, you can then increase your spend.”
# 5: Monitor your advertising spend
One of the keys to marketing is to know what works and put more money into those channels. You don’t need to be across all avenues according to Ms Fletcher.
“Monitor your social media and Google analytics regularly to assess ad performance and adjust where necessary. This is a constant, active, not passive, process.”
#6: Know your competition and always keep learning
Competitive isn’t always a bad thing. If you have competitors, you know there’s profit to be made. Ms Fletcher suggests having a detailed understanding of your market.
“It’s important to know who’s in your space and what they are offering as well as learning from other start-up businesses – the success and failures. This can help you stay ahead and avoid mistakes others have made.”
# 7: Trust and respect your Co-Founder
Whether you are starting a new venture with someone else or even if have outside funding partners, Ms Fletcher suggests the relationships you have are just as important as the idea.
“If you are a Co-Founder you need to have trust and respect for your other co-founders. There will be times of stress and differences of opinion and that’s OK as long as those robust conversations deliver the best outcome for the business and the ability to move forward. This is critical.”