Property Natter: a guide to property startups - Part 1

All the most successful startups of recent years – from Airbnb and Uber to Just Eat and Deliveroo – have melded technology with a brilliantly simple idea.

Meanwhile, in the property world, the rapid growth of PropTech has led to a wide range of products solving complex issues and offering major boosts to revenues.

But what does it take to make a startup successful? Across the next two Natters, with the help of a number of industry voices, I aim to find out.

Alex Chesterman OBE, founder of ZPG, co-founder of LoveFilm and currently founder & CEO of Cazoo

One of the UK’s leading digital entrepreneurs, Alex Chesterman is probably best known for creating property portal Zoopla, part of ZPG, which was acquired for £2.2 billion in 2018. He also co-founded LoveFilm, sold to Amazon in 2010 for £200 million.

Chesterman, awarded an OBE for his services to digital entrepreneurship, is one of the UK’s most active angel investors, having backed dozens of early stage digital startups.

You’ve founded businesses in different industries over the last 20 years - what challenges have you faced and have these differed by industry?

Entrepreneurs tend to see opportunities where others see challenges. All of the businesses I’ve been involved with have been opportunities to solve pain points for consumers and make their experiences better.

Getting people to buy into your vision is the most important challenge to overcome – you need them to want to invest in you, work for you and partner with you. And you have to convince them why you’ll succeed where others haven’t tried or have tried and failed. With Zoopla, we had to convince people why we’d win against much better-established players with deeper pockets.

Are there enough schemes to help budding entrepreneurs realise their dreams?

It’s certainly a more acceptable and aspirational career choice to become an entrepreneur today than it was when I started out. We have some amazing entrepreneurs building great businesses in the UK, some of which I’ve been fortunate enough to be able to back as an investor.

There are good schemes to encourage entrepreneurs and incentives to attract investors to new business ideas, including various tax policies and credits. It would be great to see the government do more to encourage people to start their own businesses and invest more in digital infrastructure, logistics and transportation projects to future-proof our economy.

Explain the thinking behind Zoopla’s name and distinctive purple branding?

When we launched, it was a very crowded space with dozens of property websites, all with descriptive names like Rightmove, Propertyfinder, Findaproperty, Primelocation, etc. We wanted to innovate and do things differently, wanting a name that would not limit us or the perception of us to any one specific service.

In terms of the purple branding, this was again a deliberate choice to use a colour that no-one else really ‘owned’ yet on the internet. We were really just looking to be different and get noticed. We’re now doing something very similar in terms of our approach to both name and branding with Cazoo.

When you founded Zoopla in 2007, was creating a property portal a calculated gamble?

In 2007, it was clear that consumer behaviour was changing in many markets including property. And that this would lead to a shift in the way that consumers would search both for properties and for property-related information. I found it incredibly frustrating that so much data was available but was so hard to access and wanted to add transparency and efficiency to the property market.

The UK was not short of property portals at the time we launched. But all of the others were doing exactly the same thing, simply providing an online search tool. Zoopla set out to harness the enormous amount of property data that was publicly available to combine search with research to help users make better property-related decisions.

Lydia Jones, co-founder of student housing app Housemates

Housemates, a marketplace for international students to book their accommodation, was launched in November 2018 in Liverpool by Jones and co-founder Marius Vinickis.

Where did the idea come from?

Housemates came from what was previously known as HallHang (a social app for university accommodation). We discovered people downloading the app were internationals from overseas and had not yet booked their accommodation.

We worked on exploring what internationals want from a communication perspective, how much money is currently being wasted with international agents and how international students are headhunted.

What are the risks of a startup? And what are the rewards?

The risks change depending on someone’s situation - a startup is much easier when younger due to not having many assets. When you've got a family and a mortgage it becomes riskier to start something from scratch. The main risk for most people is sometimes leaving the secure 9-5 job to put all your energy into something that may not work.

There are endless challenges, but I think it makes things a lot easier if 1) you’re passionate about what you do and 2) you know your market. A lot of the challenges startup founders face are around finding product-market fit (proving their model works), iterating faster than competitors, building the right team, surrounding themselves with the best mentors and raising capital.

There are many rewards to founding a startup - for me it's all about making a difference to a market, working on something I'm passionate about with people I enjoy working with, growing the company and meeting other people along the way.

Where do you see your business in five years?

We now live in a world where we either book or buy our holidays, clothes, insurance and more online - and we do this because it saves us time and money. Our mission is to build an end-to-end platform that works for booking student accommodation and in return saves landlords’ money, increasing transparency for all parties involved and onboarding students not only into a property but into neighbourhoods.

Akshay Ruparelia, founder of Doorsteps.co.uk and one of the UK’s youngest millionaires

Doorsteps.co.uk, founded in late 2016 and trading from early 2017, was launched by Ruparelia when he was only 17 years old and offers customers the chance to sell their home for just £99.

Where did the Doorsteps name come from?

We wanted something that was short, sweet and memorable, and would change the perception of online/hybrid agents – that you don’t see us or we’re tucked away. We send people to the doorstep, our local property consultants, and wanted a name to convey this.

So, even though we operate in the online space and don’t have a physical branch, we still offer that doorstep, face-to-face service.

What challenges have you faced in establishing your business?

Being in a new sub-section of the industry, we needed customers to adopt and understand the idea. When people heard the £99 fee, there was a lot of reticence and hesitation. So, we needed to build that trust from customers, to prove what we were offering.

The combo of the £99 fee and the fact I was only 17 when I started the business both caused question marks, which is why I was so focused on customer service, transparency and changing the perception of online estate agency. Again, the biggest hurdle was building that trust from customers.

Did you require any outside funding?

I don’t come from a family of business, but I received a small loan from an angel investor within my wider family, and this helped us to get off the ground. Since then, we’ve grown organically by building that trust from customers and through word of mouth. The price point is shocking to people, so we have to prove the service.

Since launching, we have received some outside funding through a couple of rounds of crowdfunding, but nowhere near the investment received by our competitors.

Drahim Husala, CEO and co-founder of property app Inadash

Inadash was founded by three property industry experts. One that founded and then sold a well-respected London estate agency, another that ran a European short-term accommodation company and finally a buy-to-let landlord who was fed up with the industry’s inefficiencies.

Tell us about Inadash…

The idea came about in late 2015, but the company was founded in September 2017 after the founders decided to put together their in-depth property knowledge to build something to better the industry and solve the problems they have faced over the years.

The problem is clear. It currently takes too long to advertise properties, engage with suitable tenants and let the available properties.

The solution we built is In a dash = on demand. Simple as that. We wanted to create a portal that would not only benefit the renters and the agents but also make a change in the way people rent properties providing the transparency, security, clarity and on-demand service that the industry needs.

What challenges have Inadash faced?

We’ve found some challenges along the way, such as how difficult it is to connect with some CRM's and the substantial amount of money you need to have as a startup to be recognised in an industry with such long-term established players.

Most importantly there are many startups from people that come from a non-property background providing ‘solutions’ that haven't helped the market neither tackled the real issues the market faces, making it harder for us to gain trust, regardless of our experience, knowledge and fantastic technology.

Has the internet made it easier for startups?

We think nowadays it’s easier to build a tech company in terms of available tools, resources and valuable experience for other industry experts.

However, due to the number of startups that have launched and failed within the property industry, it has become harder to obtain market share.

Great answers, everyone. Keep your eyes peeled for Part 2 in two weeks’ time.

Until then…

*Nat Daniels is the Chief Executive Officer of Angels Media, publishers of Estate Agent Today and Letting Agent Today. Follow him on Twitter @NatDaniels.