The winners in Real Estate will increasingly be the companies focussed on the end-user, that is, the people going about their daily life and work. Wework, AirBnB and Uber are some of the hottest names in the RE world. They got to where they are today by thinking first of all about what the end-user wants.
WeWork has reimagined the workspace environment by focussing efforts on the requirements of the end-user, the people and teams that want modern working conditions and perks.
AirBnB has transformed hospitality like no other, adding on demand, personal accommodation over the norm of giant hotels at competitive prices, has been a revelation for guests and homeowners alike as your home becomes a source of revenue when you are not around.
As for Uber, the introduction of autonomous electric vehicles (AEV) is probably the most impactful future trend on the RE market, it changes how people think about where they live, work and go out. If you could sleep or work whilst in transit, you may wish to prioritise quality of life more. The placement logic of homes, offices, entertainment venues and parking lots change completely in a world of automated vehicles.
In the lifecycle of RE, participants in the value-chain are typically focussed on delivering their bit, and then handing it off to the next person in the chain. Architect to Builder, Builder to Owner, Owner to Operator, Operator to Corporate, and then, finally, to the individual end-users who actually live or work there. Rarely does that end-user get consulted or listened to about what they want or need, they just need to suck it up.
Melanie Leech, now chair of British Property Federation, previously chaired the Food and Drink Association. A few months into her current role, she exclaimed “What do you mean the customer doesn’t come first?” I’ll share with you three reasons you should focus on your end-users.
First, People is Where the Information Is!
Before starting Concrete, a Proptech focussed Venture Capital vehicle, my background was in building digital products, with several startups and several bigger brands like eBay, AOL, and TimeOut. Product specialists revel in understanding end-users frustrations and joys, which allows us to craft solutions they are willing to try, pay for, and then keep using. In Tech, we call this “Finding Product-Market Fit.”
Many industries, including RE, have lots of layers between top-level decisions and the end-user. Each layer typically involves people who pass their information up the
chain, and each hand-off is subject to bias, agenda, and manipulation. Focusing on your end-user drives deep customer understanding. Meeting them, asking about
their challenges, and analysing what they do gives you remarkable insight into what’s working well and less well, and how to meet their needs better. Beyond qualitative data, objective data like energy, wellness, or usage, from companies like OpenSensors, provides valuable objective insight. This insight is where the secret to innovation lies.
Now you can see the trends, the clusters, and the gaps, in usage, interest, or consumption. Just look at what WeWork’s insight has led them to; first they solved the needs of the 1-10 person team with hot-desks, then they started serving big corporates with fully managed buildings, and now they’ve launched WeWork Spaces targeted at the SME tenant segment. Continually armed with fresh end-user insight, you will continually be a step ahead of your competitors.
Second, People Don’t Like to Talk to People.
Working with Seedcamp, the leading early stage investor in Europe, I’ve learned a few truisms in tech. One is that, given a choice, most people would rather use a computer or an app to get a task done than deal with another human. Of course, they still like talking socially, or when problems need to be worked through, but much of life and work is just getting tasks done. End-users want comprehensive information, clear options, and the ability to make a decision, without waiting for an intermediary to engage. AirBnB, Uber, and WeWork drastically reduce what was previously a painful and protracted process.
By recognising this, you can unearth many tasks that could be accomplished easier, faster, and better, by letting the end-user see and decide what they want to. Rightmove and Zoopla have made seeing your housing options in the UK easier than anywhere in the world. Ocado has made shopping easier than anywhere in the world. Companies like District Technologies are making it easier for employees in the workplace, and Homie is making it easier for the Renter to choose and view a flat. When Concrete sees companies like these that cut out painful protracted conversations, we take a closer look.
Third, You are Replaceable.
Flexible is everywhere now. It’s not just WeWork, in London there are more than 1,200 co-working spaces, (New York is second globally with only 400) and the sub-5k sqft office leasing market is falling off a cliff. Flexible Resi is taking off not just in Short-Term Lets, but we are seeing an explosion in Coliving operators like Collective, and medium-term let propositions like Projects XYZ in Germany. We see it in retail with pop-up platforms like Appear Here, and warehousing with flexible storage companies like Stowga. The days when tenants had no choice but to sign a long-term lease are coming to an end, and while Owners are uncomfortable being put in the position of Operator, it’s the ones that face this challenge proactively that will prosper.
Exclusive access to information like listing availability and deal terms has long been a defensive tactic, and these walls are falling also. Property and funding portals provide increased visibility and reduce the need for strong relationships, Geospatial Big Data players like Landinsight and Datscha empower discovery, and deal data Aggregators like Edozo and CompStak are democratising CoStar’s stranglehold. This all gives the end-user greater choice, and they will vote with their wallet. I am not recommending you just give it all away, but the nimbler competitor that creatively embraces the end-user’s appetite for information is the early bird who will get the worm.
Finally, it’s not only the nimbler Real Estate competitor that should worry you. The vast majority of all capital pumped into innovative Proptech companies comes from sector-agnostic Venture Capital funds. These unicorn-hunting experts, flush with cash, see opportunities to cherry-pick profitable segments, carve out high-performing channels, disintermediate human-led processes, and build brands where there is a real end-user focussed opportunity. Now’s the time for the visionary among the RE players to place their bets.
How Can You Get to Know Your End User?
Decide who they are for your business. It may be the end tenant, but you may also serve a few players in the value chain. Brokers who are on the street for you, Analysts developing your insights, or Underwriters who are trying to understand your strategy. Then ask them, actively, and often. User Research is not a new science, there are many consulting groups that will do this for you, but some of this expertise might be worth building in-house.
Where you can gather data digitally, all the better. Sensors, for example occupancy, is a valuable new currency. OpenSensors not only drives down lease footprint by showing you which desks and rooms aren’t being used, they also provide a data asset that you can use to increase the value of your building. Try new things. Once you have a first pass at what your end-user might want, test your hypotheses with trial applications of technology. There are hordes of startups that would love to help, and taking a “Minimum Viable Product” approach with these trials allows your company to learn quickly and at reasonable cost.
Finally, you need your whole team to be part of the journey. First of all make sure this is the job of all divisions, not just an “Innovation Manager”. Educate, encourage, and incentivise your teams to try new things. Celebrate their efforts, give them a bit of room to fail fast and learn. Not only will you attract and retain the best and the brightest employees this way, you’ll also stay a step ahead of your competitors that don’t.
For more information, please contact Taylor Wescoatt (Concrete) on:
+44 (0)7795 608 922