I originally wrote this for Unissu, the world’s PropTech marketplace, here is the link.
For me, and I’m sure I am not alone on this, it’s always great fun and source of inspiration to sit and listen to Russell Quirk.
He is a very influential figure when we take property into consideration. For this reason, it is not surprise that he was recently awarded as the top influencer in UK for PropTech.
Source: https://tytopr.com/top-10-influencers-in-proptech-tech500/
During the years, we’ve seen him involved in various conferences, events, shows, all over the UK and online. He has always been at the forefront of the discussions about the future of property and the implications the digital transformation carried to the industry.
Let’s be honest, property is a sector that has been one of the slowest to adopt technology, this is true for the UK but even more for the rest of the world.
The two uncontested “trend-setters” during the last 10 years have been the US and the UK, but other regions of Europe are now trying to do their part of the job. Germany and France are definitely worth to look at in this respect, certainly the rising interest for Axel Springer in proptech firms like Homeday, initially, and Meilleurs Agents, lately, is a strong signal.
It is not all confined in there, because Spain and Finland are strengthening their position as well, and so is Italy with more than 120 proptech firms in the space for 2019.
I in fact have recently written an article here on Unissu about the rising of the italian PropTech.
But these recent developments came around just about 7 years after something started to move heavily in the UK.
The interest for Axel Springer in Meilleurs Agent is a sign that interest is moving from online estate agency, servicing directly the consumer, to a model where services are rather directed to the agents. As Russell will say later in the interview:
“I think the way forward sustainably for estate agency is to leverage agents and their personal brand and to help them with admin and compliance and so on. That’s what I should have done differently. I should have become a UK Keller Williams in 2018 charging a full fee of one and a half per cent plus VAT on success.”
It was 2009 when Russell founded Emoov, one the most interesting projects in the entire spectrum of proptech that has drawn attention globally. It was not the first, but certainly Russell knew how to make his way through the press and get the results grow and grow.
Back then, but even now, he’s obviously been focusing a lot on online estate agency, having been mainly an estate agent for very long time.
As you might know, for Emoov things have not turned out very well. After 9 years, even after joining with Tepilo, Channel 4 and Urban.co.uk, after millions of pounds poured into the business, in 2018 Emoov went into administration and Russell had to find an alternative way to earn his living.
“I should have explored more aggressively with my board becoming a full fee agent but still using local experts still using technology still using operational centralization. And actually I’ve kind of come full circle when I started looking at what on earth I do for a living. In January 2019. How do I pay the school fees how do I feed my family.”
And here it comes Properganda PR and so on, as he will actually tell us in the interview…
“The obvious thing of course was PR. Because I’ve got a profile and reputation in property in terms of being able to gain PR coverage so it was natural that I would then do that for other people and we now have lots of clients benefiting from that as propaganda PR.”
But let’s go no further, below is a full transcription of our chat and here is a link to the podcast I recorded. 🙂
Michele Schirru interviews Russell Quirk
Founder of Emoov, co-Founder of Properganda PR, Investor Director in Keller Williams
– Michele Schirru
Hello Russell, welcome to the podcast.
– Russell Quirk
Good to be here. Thanks for having me.
– Michele Schirru
Fantastic. How are you today.
– Russell Quirk
I’m very very well thank you very much. Yeah, I’m in a good place.
– Michele Schirru
Let’s go through the list of questions I prepared for you, is going to be fun today.
Russell Quirk, founder of Emoov, co-founder of Properganda PR, Director in Keller Williams, we can continue for hours and hours in what you’ve done in the past in estate agency and not only really.
So, for the Italian community of property enthusiasts, my first question is to understand and frame who’s Russell Quirk, what is he doing at the moment? What have you been doing for the last, I don’t know, twenty five years or so?
– Russell Quirk
Twenty five years!? Wow okay.
Predominantly My background is property as you say. I spent 10 years running an independent very traditional estate agency business in Essex in the UK with my cousin Anthony. That was as a consequence of our family history going back to the 1950s. As estate agents my grandfather started the original traditional estate agency business under the Quirk name. Back in 2009 I then sold my share of that in the aftermath of the financial crisis and when things were really really tough generally but particularly for estate agents in 2009.
You know people talk about the Eureka moment. I’d been thinking about the future what I thought the future of the estate agency was, my predominant feeling was the around 2006 07 I could see what was happening in other vertical which you know particularly retail insurance recruitment and so on I think there’s a centralisation play here. I was determined estate agents did not need the footprint of multiple branches. And I think that’s definitely come true now with Foxtons and Countrywide. They simply can’t afford those branches and that’s been well-documented I think over the last few months.
So I’d be thinking about kind of digitisation of the industry. This financial downturn, the crisis then, was the opportunity for me to think about actually doing that. So in 2009 I setup Emoov, which I ran for nine years as in some ways, obviously not every way because it came to a crashing halt at the end of 2018. But in many ways was a success. We raised a lot of venture and private equity and high net worth and crowd money. So we raised 29 million pounds in total but that journey and I’m sure we’ll elaborate on was fascinating for me and was in some ways as a I quite a success in terms of the size of that business how it grew.
The processes, the operational centralisation, the marketing that we employed and so on, I mean to answer your question very quickly, the last 25 years, I’ve spent 10 years in digital estate agency and Proptech, ten years in traditional estate agency but I’ve done a bunch of other things as well around that.
So I I was in the city for a little while where I was a foreign exchange broker so it was very enlightening and actually I forged a very very z list amateur kind of broadcast career I suppose in that I do quite a lot of radio and as a property pundit really and it’s a bit of a political commentator now on the likes of the BBC LBC talk radio so I really enjoy that.
That’s kind of part of my personal brand building but also is a doorway to some of my Properganda PR clients in terms of getting them on radio and an increasing awareness of their businesses and their brand.
So I wear a few hats I think is the short answer to your question.
– Michele Schirru
Moving forward Russell, you mentioned about Unissu and I’m very familiar with their podcast.
I was really impressed once because you were a guest in their podcast and you were mentioning about something called the three Ts rule. So that means team traction and technology. So can you share with us a little more about it?
– Russell Quirk
Yeah I guess I mean there are there’s lots of buzzwords and anecdotes flying around in startup world in terms of what the magic bullets are insofar as how to succeed. And I think what I was talking to James Daisy and Eddie Holmes about was the fact that, you know, if we had to find three things in a proptech growth business that were really important, obviously technology itself in terms of what your technology is, what your proposition is, is important how you deliver that doing in a kind of an agile way without spending too much money – and in fact we did spend too much money at Emoov.
Traction is pretty obvious. You know, taking online estate agency as an example, online estate agency has no traction. I mean it did have. So it was growing strongly through 2014 15 16 17. It’s now tailed off its kind of hit its ceiling for all sorts of reasons I can go into if you want me to.
So traction of course when it comes to keeping the nerve and the appetite for existing investors and indeed for raising future money traction of course it’s very important, the rule of thumb used to be that you know you need to be growing a kind of 10 percent a month or 100 percent year on year to keep the interest and attract the interest of investors rightly or wrongly that’s still true.
And I think there are some downsides to that philosophy that you should grow at any cost. I don’t necessarily believe that that is the correct way forward because in the end you continue to focus on top line and you forget to look at your marketing cost your acquisition costs and before you know it you are out of control you’re trying to raise more money just to kind of keep the marketing lights on and then you kind of hit a wall as we did. So traction of course is important but I think that’s contextual.
And then team, people talk about team being the most important thing. And it just so is, you know, senior team is very important. Of course the people you dedicate to in terms of technology marketing operations finance. But actually I found that the nuts and bolts to kind of the rank and file at Emoov were the most important and I had some incredibly able and loyal people within the Emoov organisation that had been with me for many many years. Employee number one Lauren Rutherford, she she started with me in 2011. She walked out the door with me in 2018.
And you know I found that I was encouraged to hire real top notch CFO CMO CTO CFO – the whole c suite thing – and I actually think I probably, not in terms of individual individuals were fine and great, but I probably was encouraged to over hire which then made the business a bit too top heavy but unwieldy and very expensive in my C Suite.
Bill was a million pounds a year and we were a business with revenues of two and a half to three million before we did the merger with Tepilo. So after that when we plugged the Channel 4 and Urban.co.uk we we had six and a half to seven million revenue.
So that kind of stuff made sense. But you know a million pound a year for a c suite and a business that’s got revenues of two and a half three million.
– Michele Schirru
Madness, if you allow me
– Russell Quirk
It does not make sense but VC would say “it does make sense because you need to put yourself in a position so that you’re investable” and that that team needs to be. If you’re going to IPO the CFO is really important. You need to have him in place way before you IPO because of course he needs to be intimately acquainted with the business and so on.
And there’s a logic to that. I get that. But the practicalities of that just don’t kind of work. Guys earning 150 200 grand that you’ve given a load of equity away to. On the off chance that you might raise big and have a big exit. You know we need to understand in any sector whether it’s insurance fintech retail whatever, all the startups that they’re all aiming for the same goal which is a big exit either a trade sale or a sale to a private equity firm or an IPO, a tiny percentage of businesses hit that mark, a tiny percentage of businesses even go from raising seed to raising Series A.
In fact Seedcamp used to say that it was about 6 percent of businesses that raise seed would then go raise series A. So in other words 94 percent of businesses that raise seed don’t survive or they survive on a very very basis. So we will have this kind of founder attitude that you know I think being a founder is kind of the train driver or the astronaut for the 60s 70s and 80s you know which everybody wanted to be now everybody wants to be a founder almost regardless of the business regardless of the idea. And frankly it’s too crowded. And it means it’s a really crappy ideas out there, they mirror what happened in online estate agency which is kind of huge momentum and excitement about a particular disruptive element of the sector.
Then everybody jumped seating so lots of participants. They all raise lots of money. Could all the investors on the periphery all very excited but then ultimately there’s only room for one or two. So the long tail which is the vast majority of participants crash and burn and we’re going to see that over the next two or three years I’m afraid.
With with various businesses in various sectors including PropTech, a kind of overambitious overfunded there’s not enough room for them all to grow at the pace they need to in that particular industry.
– Michele Schirru
I think you are introducing something that it was on my list of questions because it relates to Purplebricks I think, where essentially so we made a frame for very overcrowded online estate agency marketplace because I think we were saying before recording there are 25 to 40 maybe online agents at the moment.
And obviously they all rely on heavy marketing and heavy expenditure on that and numbers are not really growing in terms of market share because I think you are in the UK around 7 to 8 percent overall.
– Russell Quirk
Not even that, it’s 5 or 6 percent online estate agency market share of which Purplebricks have about 65 percent.
– Michele Schirru
Right, fine. In one of your last comments you were mentioning about the Purplebricks numbers which you know they had to listings down revenues down profit down. So is the model dead? What does it need to happen to make this thing continue and thrive in this market essentially?
– Russell Quirk
Okay. So let’s start with the beginning of Purplebricks in terms of the evidence the data so forget for a second what Vic Darby the new CEO says in his kind of PR gilded statements to the city about you know everything’s great everything’s on the up and we’re going to have a 10 percent market share. The reality is that Purplebricks have a 4 percent market share of listings in the UK. The jury is out in terms of how many properties they actually sell. So I suspect their sold-market share is quite a bit less than 4 percent now.
The problem for Purplebricks is that they have plateaued. So their listings have actually dropped in the UK by about 15 percent year on year revenue has kind of plateaued. They just put prices up to try and increase revenue will be interesting to see what happens as a consequence of that on volumes. They’re now trying to cut costs quite aggressively.
They’ve reduced marketing spend because obviously they’re worried about increased cost of acquisition vs. plateau in listings and revenue. They have a real problem and they particularly have a problem when it comes to now meeting the expectations of the city where Vic Darby has said that they will end up with a 10 percent market share in the next three to five years. They simply won’t. And I will eat my shoes if Purplebricks get to a 10 percent market share using their current model.
– Russell Quirk
So to your question in terms of what are they going to do
– Michele Schirru
Is it like because of them or because of the model in general where other companies like Housesimple and Yopa can’t really do it even all together. Like, is there something wrong in the marketplace or is there something wrong in the company itself?
– Russell Quirk
No no look, there are. I wouldn’t say it’s necessarily the companies structurally, the problem that we have with online estate agents is that whilst they’ve all kind of spent lots of money on marketing and growing brand awareness and so on. What it turns out is true is that despite what I thought back in 2006 7. If you saved people money on their estate agency fees they would all come running towards you when you’re too cheap. It’s a bit like restaurants clothes many things When something’s too cheap it then loses credibility. So there is a consumer psychology at play.
I mean why does Apple sell iPhones at twelve hundred pounds when you can buy something from China for 200 quid. It’s because the perception is that the apple item is value even though it’s more expensive because it’s better and it’s cooler and so on. The same applies to choosing an estate agent.
People realise that it’s a six month long process in terms of getting your house on the market finding a buyer and going through. And as a consequence if it’s too cheap the concern then is that the job won’t be done properly and that is the biggest example of this I think is Easy property.
The Easy property are a cheap brand. I mean that they are renowned for everything being cheap so whether it’s coffee in Leicester Square for a quid you know coaches to Luton airport for three pound fifty or flying to Madrid for forty pounds. They are a brand that relies on their cheapness being their USP. When you then apply that to a precious valuable process and asset like property it simply doesn’t work because it’s met with huge suspicion.
So whilst the online sector is trying to push fees of a hundred nine hundred thousand pounds the buyer will simply resist. Which is why has a ceiling in my opinion 10 per cent market share, now I didn’t know that up until a couple of years ago but I was analysing what Emoov were doing in terms of all the different marketing channels the different messages pivoting on proposition a little bit and looking at our competitors. It was obvious there was a glass ceiling, there simply is.
The way forward, I think i, it’s definitely technology to a degree it is definitely operational efficiency and centralisation but actually it’s not cutting fee into the same as you know Harrods don’t have you know constant sales it’s the same as you know good restaurants like Gordon Ramsay restaurants. They don’t do you know three starters and three wine with a main course they don’t do two for one office at lunchtime. Why don’t they do that because it demeans the offering and it’s the same with property. In my view
– Michele Schirru
You mentioned somewhere that Purplebricks, Housesimple, Yopa, they will have to join their forces to stay in business. Is this something that you really believe or it was just an outcome to say something strong.
– Russell Quirk
Are you suggesting that I might say things just for sensational? No no. I believe that. Either Yopa or Housesimple cannot possibly survive, and again this is a fact. Yopa lost 35 million pounds in 2018. That was their loss. They have just raised 16 million pounds which was a lot less than they forecast they had lost their CEO, LSL had downgraded the value of their investment from 21 million to a million pounds. It doesn’t take much to work out the direction of travel for Yopa given that they’re not growing in size.
Yopa will fail. It is absolutely inevitable unless they can do a deal like I did with Tepilo where they seek some comfort and protection by merging and I think that ultimately what has to happen is Housesimple, Yopa, will have to merge with Purplebricks, they then end up with 90 percent market share.
And they will survive on the basis of that scale but they won’t ever be any bigger. But in fairness to Purplebricks they make profit because they’ve hit that magic 40 50000 listing number which allowed for that scale that profit scale.
That’s okay. But one thing is for sure. And again on another item of clothing if this ever happens you know not only will Purplebricks not trebled in size over the next three to five years but that’s also the same and the case with the Yopa and Housesimple and if they were going to expand why would they not expand it particularly actually where things have been very tight and very troublesome or worrying from a consumer point of view for the last two or three years.
Why hasn’t everybody rush to go and save money with Purplebricks, Yopa and Housesimple, it simply hasn’t happened they stopped. They either fail or they come up with a kind of merge idea and the other reason I think they’ll have to is the Tosca fund, Martin Hughes, who’s certainly not an idiot. He’s a very very clever man of some repute, Martin Hughes at Tosca fund owns a sizeable chunk of Purplebricks and he also owns a sizeable chunk of Housesimple, join the dots.
– Michele Schirru
So let’s go back to Emoov in a way. I was thinking about this. So if you had the chance. What are the two things you would do differently thinking about it now and what would you do that you didn’t do, I don’t know, for whatever reason you did not think about it or there wasn’t enough time or I don’t know, things didn’t work essentially.
– Russell Quirk
Yes so what would I do. I wouldn’t take so much venture money. And I wouldn’t have advanced a proposition that was all about top line listing and revenue growth at any cost I would have grown organically so I I put it I would have gone to someone like Simon Murdoch episode one who is you know everyone knows my favourite investor ever, brilliant fund, brilliant guy, I would’ve taken a million or two from him and grown the business organically to be kind of one of the last standing but a business that ultimately could be profitable rather than having to raise you know 10 million quid a year from new investors just to survive.
So I would’ve done that but the other thing I would have done is when I started getting twitchy, I said to Eddie Holmes and James Easley in January 2018 I sent them a message saying here’s a question for you guys for us just to discuss. I’m not saying that this was my view but I was starting to think that it could be true. I wanted to kind of hypotheses with guys that knew their stuff. I said: James Eddy online estate agency in its current form does not work, discuss.
So that was two years ago and actually we spoke, we met. We kind of kicked that hypothesis around I think as a consequence of then me having started to think that the cheap option didn’t work from a consumer perspective. I would have then, I should have explored more aggressively with my board becoming a full fee agent but still using local experts still using technology still using operational centralisation. And actually I’ve kind of come full circle when I started looking at what on earth I do for a living. In January 2019. How do I pay the school fees how do I feed my family.
The obvious thing of course was PR. Because I’ve got a profile and reputation in property in terms of being able to gain PR coverage so it was natural that I would then do that for other people and we now have lots of clients benefiting from that as propaganda PR. But when I then went to see Ben Tate at Teller Williams about PR funnily enough I didn’t realise previously Keller Williams had been around since the late 80s.
Their model is exactly the model that I had started to consider during 2018 which is full fee plus technology centralised but actually focusing on the agent rather than the business. And that’s why I’ve signed up to be an investor in Keller Williams because the model I think and I’ve said this before so shoot me down in flames here. I think the way forward sustainably for estate agency is to leverage agents and their personal brand and to help them with admin and compliance and so on. That’s what I should have done differently. I should have become a UK Keller Williams in 2018 charging a full fee of one and a half per cent plus VAT on success.
– Michele Schirru
Right. I think we mentioned this about a few weeks ago in a private conversation about that and I think this drives me to ask you a question about Compass, which is something that is kind of similar in this sense, in the US obviously, much more valued than Keller Williams. Even though they apparently do the same sort of thing, Mike Del Prete, I don’t know if you know the report about it, he really says are they a tech company or you know they are just a standard company and overvalued and…
– Russell Quirk
Look, they’re as much a tech company as WeWork they’re not a tech company.
– Michele Schirru
Yeah. For instance.
– Russell Quirk
But of course they’re being valued as a tech company because it suits them too because you get valued at ten times revenue rather than three to five times profit. It’s great for companies and they’ve got Softbank behind them. The problem Compass are going to have, and look, they are a great business and they grow very quickly and they do provide a different…
– Michele Schirru
Don’t you see them in Europe?
– Russell Quirk
I wouldn’t rule it out although the commercial history of estate agencies in different territories trying to encroach on other territories is not a good one. Purplebricks are definitely testimony to that as are Foxtons. They actually had a terribly unsuccessful time try to expand into the US, so Compass trying to expand as they are into the UK.
You know you could say well, hang on a sec, Keller Williams is a US business but actually Keller Williams is not a US business it might be domiciled there but it’s actually already in 42 countries it’s already expanded and it’s not expanding as a tech business although it is tech enabled it’s expanding as an agent empowerment proposition.
– Russell Quirk
So I think if companies just come to the UK expecting to be able to do the same as they’ve done the US, they can do it but it’s not easy because culturally legislatively things are things are quite different but the companies are fascinating and they’re going to have a shock when everyone realises as they have for WeWork that they are a real estate business not a tech business and then they become valued accordingly.
The other problem for Compass is that they have raised money simply to buy market share so that they’ve done exactly you and I were discussing earlier which is that their growing top line in terms of revenue and agents share agent count at any expense.
So you listen to what Mike Del Prete says, his analysis shows that actually in some instances companies will pay their agents more than 100 per cent of the fee that they earn to attract them from Coldwell Banker Century 21, you know, Element and so on. Well that’s great short term, really impressive to investors when you can say “Hey Look, we’re doubling our agent count every quarter”. Well what happens when those agreements run out? So you know when you say to a brokerage firm that you’ve been paying 125 percent of fee to at the end of their two year tenure we’ve also paid them a kind of golden hello of maybe five hundred thousand dollars.
The brokerage firm says to Compass. Okay let’s go again. Continue to pay me 125 percent of revenue which of course is completely unsustainable. And of course Compass then says, you know, we can’t continue to do that. That was a kind of one off that was just to attract you. What then happens those people then go back to Keller Williams and others.
I think Compass got a real problem although what might Del Prete will say is that companies are trying to become the go to default real estate business so you would go to them as a buyer or seller rather than going to any other agent or a portal while they pull that off. Great.
– Michele Schirru
So what do you mean by that. What is the difference on what they do at the moment.
– Russell Quirk
So at the moment people will use Zillow and I think what companies are trying to do is almost to circumvent Zillow as a seller you would just automatically go to Compass because you believe that they’re kind of all things and all powerful but also as a buyer you will go to campus as a buying agent.
Then they become indispensable and then they’ll try and do things like On The Market if done in the UK you know come to ask because all of our listings are unique to ask before they go on the MLS or they’re unique to us before they go to Zillow. I don’t think trying to do an Amazon which is effectively to saturate the whole market I don’t think I don’t think the consumer wants that. And I think the industry will fight back very hard against that, what you’re doing is depriving the consumer of choice. And that’s actually a very dangerous thing indeed.
I think Compass will do okay. I’m sure they’ll succeed but I don’t think World Domination beckons.
– Michele Schirru
Right. But in some way you are agreeing on the fact that real estate brokerage companies like Keller Williams, RE/MAx or even Compass, even though they do it in a very technological way, can do better because they provide services to agents who are encouraged to leverage their personal brand as you say can be more profitable can be more. You know they can do more compared to for instance online estate agents.
– Russell Quirk
Look, online agents in the UK and some in the US like royalty and others are defined by their cheap fees. Cheap fees do not work in scale. They simply do not scale from a consumer point of view. As we said earlier.
So the concept actually in terms of centralisation and technology is the same really whether it’s a Purplebricks or Keller Williams. Their approach to technology aiding the consumer and indeed aiding the agency is the same. The difference is the fee.
When you’re charging a four thousand pounds fee on completion and it’s a percentage therefore you have an incentive to sell and to get the best price that trumps hugely a fixed fee upfront where there’s no incentive for the agent to go out and sell a property, and the psychology of an agent and bear in mind I’m gambling as an agent.
Now. I spend Saturday and Sunday sometimes I’ll do a valuation here and there just to kind of keep my hand in Mr. property I sold a property yesterday afternoon for instance and earn two and a half thousand pounds as an individual and offer Keller Williams for me as a consequence of selling a property at just three hundred and five pounds.
So the motivation that the agent has as an individual when he is earning, he or she, is earning a two and a half thousand pounds fee their attentiveness their courtesy their professional levels increase because it’s worth their while to put themselves out for that consumer. That’s the difference. That’s the difference when you’re a Purplebricks guy earning 150 quid in the beginning. Do you care about the customer ongoing. Do you care about access. Do you care. You simply don’t care. That’s the reality.
And I’ve interviewed Purplebricks local property experts who basically said that once they’ve been paid within three or four days of listing the property they don’t care. They don’t care about the customer anymore because are not incentivised and remuneration is misaligned with the wants and needs of the consumer.
What you find with Compass, Keller Williams, whoever is the agent in the business and the consumer all aligned in terms of what success looks like and everyone’s incentivised to make sure that the outcome is the best one possible. I think there’s in fee terms a huge difference between what I guess you would call a hybrid or hub business vs. an online agent.
– Michele Schirru
So the solution may seem like they will just put up the price and that’s it. They just can do whatever the rest of the world is doing. But then how do you justify that.
– Russell Quirk
Well yeah but but then the gamble is that they then lose the five per cent of people that are attracted by low fees and fixed fee with a view to them trying to get to the 95 percent. The problem then is that they then got to do everything they can from the marketing perspective to recruit the customers in the 95 percent bucket. But then of course you are directly competing on fee with everybody else.
So you kind of you lose one disadvantage and gain another. And the other big problem of course for let’s say Purplebricks. Now if they were to pivot and become a percentage fee based on success or a contingency fee business just like Boston’s if Purplebricks were one point five percent on completion. If they list a house today and they sell it in February it won’t complete until May which means they don’t get any money for any of the properties they list or sell.
Let’s say for a six month period which is pretty average. How do they sustain that. How do they sustain that in terms of their cash flow for six months to bear the burden of all their overheads with no revenue coming in the six months. That why pivot for someone like Purplebricks, Housesimple and Yopa, I think it’s difficult, it’s impossible because continue to say to investors give me 10 million quid. It’s a gamble. And hopefully we’ll come out the other side of it. Okay.
And then they’re not geared up for it. They don’t have the culture around being paid on success. They’d have to change their entire culture as well. Now I could have done at Emoov because I come from that background but you know the other business is you know. The guys running young, I mean they don’t even have a CEO but the guy that was running it doesn’t come from property. Sam Mitchell that runs how simple comes from letting the guy running Purplebricks comes from money supermarket. What the hell do they know about traditional estate agency in the fee mechanism related to that. So it’s a real big problem for them to pivot.
– Michele Schirru
I read somewhere that Keller Williams basically, this is for the US of course, they are trying as much as Zillow as well is doing to become an iBuyer and therefore you know shift a little bit their business model. So is the instant buyer the future for real estate or is just another marketing thing to you know gain leads and maybe sell them through agents. What do you think about it?
– Russell Quirk
Yeah. Maybe a bit of the latter. I mean certainly offering a an instant buying proposition will create lots of lead. You could then convert into regular listing. Of course but there is a lead gen element to it for sure. You know I’m quite intrigued by the idea buying model and of course we have one business in the UK, Nested. They’ve been very very very quiet for the last year or so. Might just be because they don’t have a very good PR agency in place so that was
– Michele Schirru
Are you proposing yourself for the job?
– Russell Quirk
Yes. Not 100 percent. Yes of course. So we don’t hear much from them. They’ve raised quite a bit of money but I don’t really know what they’re doing and I don’t think whatever they are doing they certainly don’t have massive market share so I think I’d buy in the UK certainly very niche.
The problem with it of course is the the the label that it has is that you will always sell for below market value. The seller in the UK the consumer here that kryptonite. I mean that’s really a real negative for sellers here to go into a transaction where they knowingly under sell their home. It’s just it’s against the culture of us aspirational kind of proud homeowners here.
I think Opendoor are very successful of course. Zillow actually less successful, they are trying their instant offers proposition. I don’t think they’ve had much success in terms of what they sold and certainly the profit they turned and the same with Knock which is the other business but I don’t think he’s a patch on open door so it’s niche. It’s always going to be niche.
People are always going to try and get the most money they can. And if you say to a seller what’s more important to you best price or speed. Choose one and you cannot choose one then they will always choose best price.
– Michele Schirru
I think it’s something very strong in southern Europe for instance where the market is much more complicated and obviously you know the timetable is very longer than the UK and prices have fallen down much more than the UK.
For instance in Italy we’ve got Casavo, in two years time roughly there raised hundred million euros which for Italy is a lot of money.
It’s not like you know the city in London and or the US and they are doing very very well. It’s becoming really sort of a go to place really. I think for Southern Europe Spain Portugal Italy Greece there will be a lot of room for this sort of model even though obviously it’s very capital intensive and this markets here are not really that venture capital friendly in a certain sense.
– Russell Quirk
I suppose is it isn’t predominant debt and that’s certainly Nested raised 120 million but 100 million was debt rather than equity.
– Michele Schirru
Yeah probably is 50 50, something like that, it is not all the equity of course. I mean they are not Opendoor where probably is more than a billion dollars in equity or something like that. So it’s completely different.
– Michele Schirru
Russell, we’re going to the end. My last thought is about your award. A recent award above the most influential voice in U.K. for Proptech. How do you feel about it.
– Russell Quirk
I love it. It was ridiculous. I’m like I’m flattered. I was on the title list the year before but this year when it came out I think I was the number one project influencer on the power. I think on the whole I think I’m the 16th most influential person in the United Kingdom. I was unfortunate I was just under Prince Andrew which is according to the I believe meet this interview recently not a good position to be in more ways than one. But yes so I was kind of surprised really that I was seen as so influential. But I I’m flattered and I’ll I’ll take it of course. But I yeah take it with a pinch of salt.
– Michele Schirru
Cool, so I really thank you very much, Russell, it was very very fun and you know you always have lots of things to say and do very very interesting opinions on you know other companies Proptech in general and obviously you know you are live in person for Proptech really. So I do agree with them.
– Russell Quirk
Well and I’m an advocate of tech for sure. I do think Proptech is in danger of going too far. I think there are lots and lots of solutions out there trying to find problems. I think you know I don’t see Proptech as a thing. I see prop tech solutions within the industry and within businesses as being a thing. And the problem of course is that you know Proptech sits there next to an industry which is you know full of inertia.
I mean it’s really hesitant when it comes to investing in property. You know I was do a consultancy work for a business that was part of Mittal family portfolio at the beginning of this year. And actually when you go and speak to the likes of Savills, J.L.L, Strutt & Parker and so on, they kind of all know they’ve got to do something but they don’t really know what. And they don’t want to be the first.
And you know it’s taken CBRE I think who’ve done some quite notable things in technology over the last year or two it’s taken them a long long time to kind of figure out what they should do. But I think in fairness that caution is perhaps in some ways well-placed because I think that I think there’s a lot of bullshit stuff out there.
– Michele Schirru
Yeah absolutely. Absolutely. Right. Thank you Russell.
– Russell Quirk
My pleasure.
– Michele Schirru
I’m gonna stop the recording now.