There are a number of challenges that proptech companies need to tackle to succeed. Mentors and advisors often notice these issues in large enterprises and SMEs, with the greater impact felt by startups. These challenges often cause a snowball effect, especially if it starts at the ‘Minimum Viable Product’ level and continues through market penetration.
Most proptech startups tend to source talent from a purely tech background without real estate experience. While a tech background is important, the lack of real estate experience can hinder their ability to perform and may have a negative impact on the entire business.
Although skills are largely transferable across sectors, there is a fine line between technology knowhow, and market knowhow. Ideally brands must strike a balance between the two in their new hires.
The importance of talent cannot be overstated. We’re witnessing an influx of talent from Russia and the rest of East Europe into Dubai. These resources are tech-savvy and well experienced in proptech and everything tech. With Dubai offering the right platforms for investors, great initiatives and innovations, we are likely to witness an unprecedented surge in virtual real estate.
Working in silos
Most real estate companies in the region still segregate conventional, digital and product efforts. They hire and treat employees as independent departments, with separate KPIs and performance metrics. In many of the well-known real estate companies, the lack of collaboration between digital, conventional and product marketing and planning, results in weakly integrated customer-facing communication.
In some companies, a conventional marketer might not be knowledgeable of digital plans to target and re-market to an audience, and so the product planning works in a silo. This is not in the best interest of users or customers.
Another example is pricing strategies. Pricing often comes from business planning without involving marketing in the process. A digital professional may need a promotional margin to attract online users, and a conventional marketer must then creatively present this product at the set price without being involved in the pricing strategy.
The moment of truth in real estate is owning a physical property, unless we’re talking about fractional ownership, tokenization or virtual assets. More importantly, over 80 per cent of the revenue of major developers in the UAE are driven by real estate brokers, and only 10-15 per cent come from digital channels.
Therefore, the thinking should be how to integrate the broker into an omnichannel journey, and how to facilitate their customer funnel and collateral through digitalization, and not to decide on offline or online without the other. Taking agents and their processes digital is a long journey that cannot be completed overnight. It needs a lot of education and determination.
It’s rare to see brokers being asked about their pain-points and offering solutions. Most of the proptech businesses assume that brokers will shift their behavior and loyalty because you are offering them an app. Yes, the app is great, but there will be so many of them, and did you involve the broker in developing the app?
Founders tend to save on R&D, thinking that desktop research is enough to get the job done.
This results in a situation where ‘neglected brokers’ go back to their conventional ways of doing business. Not being involved in the solution leads them to believe that they don’t really need it, or that it doesn’t really add the value they expected from it, so their perception becomes that this app doesn’t solve our pain points.
Roping new investors
Many startups, especially in the pre-seed stage, try to save on product development. But while doing so, they bring on board supportive talent to help them kickstart their journey, and they give them a stake in the startup in return and include them in the board. After a year or two, if the startup turns out to be successful, and new shareholders request to join the board, it will be difficult to make room for the newcomers and allocate shares for them.
I always give two pieces of advice for startups; choose your board carefully, and be wise about your overall company valuation when you grant shares. Always go for a partner who sees the overall picture and appreciates the vision of your startup. A partner who is aware of the exit strategy and can participate in making it happen.
Partners should also be well-connected within the industry and have an influential opinion. And needless to say, they should believe in the idea and have what it takes to succeed.