The State of PropTech

Among the many strands of X-Tech that we have come to hear about, PropTech is currently emerging as something of a hot topic, judging by a recent Meetup in Melbourne organised by MessageMedia. With the ambitious goal of exploring the “Past, Present and Future of PropTech in Australia”, it was clear that the field can mean very different things to different audiences.

Facilitated by Bec Martin, the panel comprised Shelli Trung, APAC lead for the Reach PropTech Incubator; Mark Armstrong, CEO of RateMyAgent; Alan Tsen, seed round investor with a focus on disruptive FinTech startups; and Nigel Dalton – ex-REA Group, who also gave a key note address.

Given the format and nature of the discussion, I won’t attribute specific comments to particular individuals. Instead, here are some of the panel’s observations (in no particular order), including some pitfalls for the industry, and key points that all market participants will need to consider.

  • In light of recent events, it was perhaps unsurprising to hear the view expressed that WeWork is “not very prop, not very tech”, as its business model and funding challenges became apparent. Generally, the view was that the co-working space fad has had its day (although Melbourne still manages to support numerous co-working spaces and models, not all like WeWork, since the local demand is there?).
  • We face significant local economic challenges (low inflation leading to minimal GDP growth and negative interest rates; declining wages/purchasing power in real terms; falling retail spending; over-extended household debt; and underemployment in the wider job market).
  • On the other hand, Australia still hasn’t had a recession since 1991, and house prices have just seen the biggest monthly increase since 2003, yet banks are imposing more stringent lending criteria.
  • Depending on which economic theories you favour, this either means easier access for first time buyers thanks to lower interest rates; or more rent arrears, increased mortgage stress and greater homelessness because of a lack of affordability and/or deteriorating lower cost housing options.
  • PropTech is not just two-sided online residential market places (although data analytics and digital marketing capabilities are integral to that particular segment).
  • PropTech should also embrace sustainability in terms of environmental efficiency and affordability. Social impact will likely mean adjusting home owner expectations in terms of dwelling size and carbon footprint. Equally, smart cities and more mixed use development is also being increasingly factored into urban planning and infrastructure design.
  • The increase in higher rise and higher density housing has also led to cost cutting in the choice of materials (flammable cladding), and deregulation and other factors have exacerbated structural defects where there is inadequate insurance protection for home owners.
  • What is happening where PropTech and FinTech intersect, such as the notion of fractional ownership? While this is something that is increasingly more likely (especially with Blockchain technology and tokenisation) if first time buyers have no other way to access the property market, what should be the appropriate licensing regime for these new financial products? What should be the credit risk criteria, lending models, prospectus design, funding structure and tax & accounting treatment? What if such developments include social and inter-generational housing? Or achieve the highest environmental standards/lowest greenhouse emissions?
  • For Australian PropTech startups wanting to go global, there were some warnings about the lack of cross-border tech transfer, and an absence of cultural awareness and curiosity by founders.
  • Meanwhile, on some measure, Facebook is probably the largest residential rental marketplace in the USA. What does that signify for future markets and property transactions?
  • Despite the success of real estate market places in Australia, the model does not easily transfer or scale in other countries. Equally, models from overseas might not work here. There was some scepticism about the so-called “iBuyer” model, and also the agency aggregation approach by firms like Compass (“you can’t buy relationships”). Plus, even local brands can go sour (e.g., Run Property and its subsequent merger with Little Residential to form LITTLE Real Estate).
  • IoT-enabled solutions are a growing theme, especially in aged care, and where AI learning patterns are being applied to energy efficiency, for example, or to improve facilities management (another PropTech segment ripe for disruption). This also links to the use of and intersection between On-line/Off-line data, such as CAD and 3D modelling, and “digital twins” (real-time databases of building design files) for mapping and monitoring physical structures. While in the UK, the concept of, and need for, Digital Twins has led to a raft of industry-wide initiatives and collaboration.
  • Despite Australia’s impressive work in creating standard data structures for residential property, there is still a lack of transparency when it comes to the results of private auctions (but isn’t that the idea – they are “private”?). According to the panel, similar data overseas is considered to be quite “dirty” (unstructured and non-standard).
  • The panel anticipated new PropTech opportunities for those companies offering “high touch/high end” services, and those providing “low touch / high tech” solutions.
  • One common data and infrastructure management challenge is dealing with legacy information systems, and sluggish internet speeds (despite, or because of, the NBN), meaning there will inevitably be some bifurcation in service and quality, depending on building design, purpose, age, location, value etc.
  • Finally, there were concerns that as security data and facial recognition technology becomes increasingly algo-based, it raises questions of privacy and misuse of personal and confidential data.

Next week: Pitch X – Launch Into A New Decade

 

 

Recent Notes from Europe

Over the past few weeks I have been travelling in Europe – Switzerland, Croatia and Italy. It was a great trip, and prompted a few observations along the way. Here are some key recollections.

First, after making a number of trips by train, bus and boat, it reinforced the sense that in Europe, public transport is seen as an essential service and not just a means of last resort (you know, that notion we sometimes experience elsewhere that suggests “only losers take the bus”). As a result, public transport is generally clean, safe, efficient, punctual and largely affordable. One counterpoint is that as a temporary visitor, accessing and paying for tickets such as multi-day / multi-system travel passes is not always straightforward.

Second, despite the close proximity of the three countries I visited, I had to use different fiat currencies in each location – and in the case of Croatia, although it is a member of the EU, the Euro is not always accepted and it maintains a separate currency (the Kuna) that is not easy to exchange outside the country. And when you get cash out of an ATM, it’s mostly in denominations of HRK200 – but local shops hate having to change large notes. Plus, there are still instances where plastic money is not accepted.

Third, visiting the extensive national art collections in Zurich (the Kunsthaus) and Milan (the Museo Del Novecento) was a great opportunity to see works by significant twentieth century artists beyond the Dadaists and Futurists respectively – including many works that rarely travel abroad.

Fourth, for all my reservations about organised religion, you can’t deny that a key legacy of European Christianity is church architecture, and the associated patronage of the arts. The Duomo in Milan even affords visitors the opportunity to walk along the roof terraces to get closer to the decorative flying buttresses and mini-spires topped with hundreds of statues.

Finally, along with all the excellent food I was lucky enough to order in restaurants, the trip was a great opportunity to sample local and regional wines, especially while in Switzerland and Croatia. We just don’t see that much of these in Australia, for obvious reasons. Plus, the global phenomenon of craft beer is still alive and well, all adding to the gastronomic experience.

Next week: Recent Notes from Hong Kong

Startup Victoria – Best of the Startup State Pitch Night

In support of Victoria’s reputation as “Australia’s Startup State”, last week’s Startup Victoria pitch night was designed to showcase four of the best local startups. Hosted by Stone & Chalk, the judges were drawn from Mentorloop, Brosa, Giant Leap Fund, Rampersand and Vinomofo.

The pitches in order of presentation were (website links embedded in the titles):

Code Like A Girl

Founded four years ago, Code Like A Girl’s stated mission is to bring greater gender diversity to the ICT sector (information and communications technology), within both the industry and education spheres. To do this, the founders say we need more female coders, which they plan to achieve via coding camps, internships, and community events. Positioning itself as a social impact enterprise, the business is active in four States, and 75% of interns are placed into full time roles.

To support the ongoing development of its “role ready” value chain and to prepare for possible overseas expansion, Code Like A Girl is seeking $1.5m in seed funding. Currently piloting the training model via education providers (RTOs, boot camps, universities, online code schools), the business takes a 10% commission on courses sold (held twice a year), plus it charges placement fees of $2k per person.

But the model is difficult to scale, especially as Code Like A Girl does not own or create the actual training content – it is acting as a sales channel for third party courseware, and providing platform for advocacy, engagement and influence. Its key metrics are based on things like social impact scores – such as 30% of kids return to boot camps. The panel felt that the community platform is a huge cost centre, and it might be preferable to try a TedX model, where Code Like A Girl provides branding and foundational support to build more of a network effect – but without its own curriculum, the business will still struggle to scale.

Seer Medical

The business claims to make epilepsy diagnosis easier, and is currently raising $14m for European expansion (UK & Germany). To improve current diagnosis, the model needs to capture time series data to distinguish epilepsy from other conditions, but do so faster, cheaper and more efficiently than current processes. Founded in 2017, Seer has already serviced more than 1500 patients via 200 clinicians.

Using the Seer Cloud infrastructure,  it can achieve diagnostic outcomes 10x faster than traditional methods, and the platform is using machine learning to train its algorithms. The service is subject to Medicare reimbursement, which has no doubt assisted adoption.

Asked by the judges if the platform could be used to diagnose other conditions, the founders mentioned cardio, sleep and other health domains. As for competition, this comes mainly from the status quo – i.e., hospital based services. With advocacy from neurologists, giving them access to customers, the founders have a strong track record in the research field, which helps to open doors with clinicians. Along with research partnerships, plus the public health cost reimbursement, data is the fuel of the business –  Seer even have access to some third party data on which to train their diagnostic.

Liven

A dining rewards app, Liven is also bringing a behavioral gamification layer to a real world use case. Currently, there is a poor linkage between loyalty programmes and gamification. So, Liven has launched a universal reward token (the LVN token) for use in a digital/real world context.  The details were scant, and the status of the LVN token sale is unclear, but it seems users can earn LVN tokens from completing certain “missions”. The token (using a standard ERC 20 token format on the Ethereum blockchain), is designed to be interoperable and fungible (but Liven does not yet appear to use blockchain in its end user app or merchant point of sale solution).

The said merchants pay a 10-25% commission on app-based sales, of which upto 40% is paid back to the end user in the form of LVN tokens – if I got the maths right, Liven itself is securing $15 profit on every $100 of sales. Currently only available in Melbourne and Sydney, the judges wanted to know what the appeal is to merchants. According to the founders, users typically spend more in an average transaction when they use the app. It also seems that the app only works in brick and mortar restaurants, cafes and bars. The path to scaling will be via channel partners such as PoS systems.

Although not yet deployed, in future, it was suggested that users will be able to pay in any crypto – which raises all sorts of questions about the tokenomics of the LVN token, and whether LVN will be subject to exchange rate volatility (and even token speculation) or act as a stable coin; if the latter, what will it be backed by or pegged to?

Phoria

Phoria is in the business of extended reality technology (XR). Started in 2014, Phoria was an entrant to the Melbourne Accelerator Programme (MAP), with the stated goal of moving VR into a mobile experience (“democratize VR”).  Having gained some clinical VR research experience, Phoria has since worked on commercial projects such as “Captured” (turning a 3D scan of a building or structure into a Digital Twin), “Rewild Our Planet” (a Singapore-based AR experience), and various art installations museum exhibits.

Phoria is commissioned by tech and media brands to create XR content. It has developed a SaaS model, whereby it can turn real space into virtual space (“virtualising internal space”).

The judges wondered where we are along the cycle of mass adoption vs peak hype. In response, the founders mentioned that the first wireless headsets are now available, although consumer-facing mixed reality hardware is still 3-5 years away. With a growing customer base in engineering and architecture applications, Phoria’s main focus is on spatial information.

After the votes were counted, the People’s choice was Seer Medical, who also won the overall prize.

Next week: 30 years in publishing

MoMA vs SFMOMA

As regular readers of this blog may have come to realise, any opportunity I have during my overseas travels, for business or pleasure, I always like to visit the local public art galleries. Apart from providing a cultural fix, these institutions can reveal a lot about current fashions, curatorial trends and even technology adoption in the elite world of marquee museums. Earlier this month, I was fortunate enough to visit MoMA in New York, and SFMOMA in San Francisco.

Mario Bellini – Olivetti TCV 250 Video Display Terminal (1966) – MoMA New York (Gift of the manufacturer) – Photo by Rory Manchee

Both museums are housed in contemporary buildings which, in keeping with a noticeable trend among modern galleries and museums, emphasise their vertical structure. Compared to say, the 18th/19th century museums of London, Paris and Berlin (with their long, languid and hall-like galleries), these 21st century constructs force us to look upwards – both physically, and perhaps metaphorically, as they aspire to represent “high” art in a modern context?

Although I have been to MoMA many times before, there is always something new to discover among the touring exhibitions and permanent collections. On this latest visit, there were four standout displays: Thinking Machines: Art and Design in the Computer Age (see illustration above); Louise Bourgeois: An Unfolding Portrait; Max Ernst: Beyond Painting; and Stephen Shore.

Apart from the latter, there is clearly a statement being made within the format of “Title/Name – colon – concept/context/subtext”. Stephen Shore is obviously an exception to this curatorial technique. Here is a photographer, whose name I was not familiar with, but whose work seemed both familiar (everyday images and popular icons) and exotic (otherworldly, outsider, alien); yet also pedestrian (repetitive, mundane) and alienating (elements of the macabre and voyeuristic).

The Thinking Machines display threw up some interesting juxtapositions: most of the devices and the works they produced were artisanal in approach – one-off pieces, requiring detailed and skilled programming, and not the mass-produced, easily replicated works we associate with most digital processes these days. Plus, even when the outputs were generated by a computational approach, the vagaries of the hardware and software meant the works were more likely to produce chance results, given the large role that analog processes still played in these systems-defined creations.

Louise Bourgeois’ work can still challenge our sensibilities, especially when conveyed through her lesser-known works on paper, even though many of the images are familiar to us from her sculptures and installation pieces (the latter represented here in the form of one of her giant spiders).

The exhibition of works on paper by Max Ernst also reveal another aspect of the artist’s oeuvre, although unlike Bourgeois, I feel there is greater affinity with his more formal paintings because, despite the different media in which he worked, there is a consistency to his image making and his visual language.

Across the country in San Francisco, this was the first time I had been to SFMOMA, so in the available time, I tried to see EVERYTHING, on all 6 levels. But I still manged to miss one entire floor, housing the late 19th century/early 20th century permanent collection.

The main exhibitions were Robert Rauschenberg: Erasing The Rules; SoundtracksWalker Evans; Approaching American Abstraction; and Louis Bourgeois Spiders.

So, less of the colon-delineated concepts compared to MoMA, and more literal titles – and you have to think that photographers, like Shore and Evans, don’t merit these sub-textual descriptions, because with photographers, what you see is what you get?  On the other hand, with Bourgeois’ Spiders, it contains what it says on the tin – giant spider sculptures.

I’d seen the Rauschenberg exhibition earlier this year at the Tate Modern in London, as it’s actually a touring show curated by MoMA itself. Seeing these (now familiar) works in another setting revealed aspects that I hadn’t appreciated before – such as the similarities between Rauschenberg’s collages and combines, and the mixed media works of Max Ernst and other Surrealists, for example.

The Evans exhibition was an exhaustive (and at times exhausting) career retrospective. In addition to many of his iconic images of crop farmers during the Great Depression, there were more urbane/mundane images of shop window displays, merchandising and branding – not too dissimilar to some of Shore’s serial photo essays.

Wandering through (or approaching…) the American Abstraction display was like immersing oneself in a who’s who of modern US art: Brice Marden, Sol Le Wit, Robert Motherwell, Clyfford Still, Cy Twombly, Adolph Gottlieb, Morris Louis, Sam Francis, Ellsworth Kelly, Lee Krasner, Agnes Martin, Sean Scully, Frank Stella, Joan Mitchell…. It struck me that despite the differences among these artists, and their individual mark making and contrasting visual languages, the collection was very much of a whole – the familiarity of many of these works, in close proximity, felt very comforting, even though the original intent was potentially to shock, challenge or disrupt. That’s not to say the works no longer have any impact, it’s just that our tastes and experiences have led us to adapt to and accommodate these once abrasive images.

Finally Soundtracks was probably the weakest of all the exhibitions I saw, pulling together a mish-mash of mostly sculptural and installation works embodying some form of audio element. My interest in this vein of work probably started when I saw the exhibition, “Ecouter Par Les Yeux” many years ago in Paris.

Despite a few banal pieces (too literal or pedestrian in their execution) this current incarnation had some individually engaging and landmark pieces: namely, Celeste Boursier-Mougenot’s “Clinamen”, a version of which has been on display at Melbourne’s NGV in recent times; and Brian Eno’s “Compact Forest Proposal”, which I only know of through its audio component – so here was a chance to walk through the fully realised, and dream-like installation.

As 2017 draws to a close, Content in Context will be taking a (much-needed) break for the holidays. Having made 8 overseas trips in the past 12 months, the author is looking forward to spending some down-time closer to home. Many thanks to all the people who have made 2017 such a truly memorable year for me – for all sorts of personal and professional reasons. You know who you are. Normal service will resume in January, and have a safe, peaceful and uplifting festive season.