Don’t let your ego take over. Are you sure your ambitions are not outpacing your abilities?
Topic – The big moves of 2018
Mentor – John Knight
- How easy is it to hang up your own shingle?
- Big teams in big businesses
- Discussion around disruption
Prop Tech with Joel Leslie – A look back at the tech highlights of 2018.
Kevin: As we continue to look at John Knight’s reflections and takeaways from 2018, he joins us once again. John, of course, from businessDEPOT. John, let’s have a look at big versus boutique, which you promised yesterday we’d have a chat about today. This is industry fragmentation, what’s happening with teams and so on. Good morning.
John: Good morning, Kevin. Yeah. This is a topic that I’ve really been curious about, especially in the last 12 months. Partly I’m curious about it, because it’s not just in the real estate sector that this is happening. It’s happening to professional services like myself, accountants, lawyers, and so forth, as well as what I term as industry fragmentation.
John: And what I mean by that, is we can see now it is so much easier for a one-man show to set up. So someone, a top salesperson or top property manager, to go out and set up their own shingle … although that shingle these days is probably just a website. Doesn’t even have to have a physical location with a shingle out the front. And we’re seeing it easy through the @realty models or these little boutique operators that are setting up. With all the cloud technology available now with the ease of putting a website up using WordPress or Squarespace or something like that, we’re seeing this massive volume of new boutique operators able to set up.
John: And what they get, is they have a real competitive advantage around one-on-one relationship. If that’s what the landlord, if that’s what the vendor’s looking for, if they’re looking for the principal to hold their hand all the way through, not going at it through other staff members, then that can be a competitive advantage for them.
Kevin: I question sometimes the viability of some of these businesses. They work at such low levels, just high volume, low income from the agents. Admittedly, the agents are making a lot more about it, but what about the ongoing viability of some of these businesses, John?
John: Look, I think they undoubtedly reach a point where they cap out. But some of these boutique operators, they only want to achieve a certain amount of performance. Some of them don’t want to be the best real estate agency in the area. Some of them just want to have an easy way, so maybe they do one sale a month and they earn easy money one sale a month. There’s good coin that comes out the bottom for them, and they’re not trying to meet all expectations.
John: As compared to the other end of the industry, which is the big end. And I very much see businesses in the real estate sector going bigger or more boutique, more niche, more specialised.
Kevin: Big teams in big businesses?
John: Yeah look, I always have loved the philosophy around every person in a business needs to be treated as a business within a business. And we’re seeing bigger teams, whether you call them pod structures, or whatever terminology you use for them, building these bigger teams within big businesses, I think is becoming more and more common now and I think only going to become more and more common. I’m getting asked questions about all different types of business models these days. People that want to come in and pick my brain around strategy and what are others doing in the industry and those types of things. I can see these models are going to grow to enable these teams to really shine within another bigger brand environment.
Kevin: This is, I guess, an add-on from what we talked about yesterday with independent contractors really, isn’t it?
John: Yeah, undoubtedly. When you do have a team of people working within a business, and you’ve got companies set up and it’s a true business within a business, then it can really support the idea of being an independent contractor. And I would only do that through a company structure, so very much there’s a link back to that discussion around the contractors.
Kevin: What about Purplebricks? What’s your view on that?
John: Look, I think Purplebricks are going to have their place. They’re going to have some market share, but their competitive advantage is going to be one thing, but I don’t think it’s going to dominate the … or my view is it doesn’t look like it’s going to dominate, because not everybody wants to compete on price. Some people want the glamorous real estate agent in the area that’s getting all the profile and creating all these good looking videos, and so forth, and breaking records with price.
John: But I think there’s elements in Purple Brick that I think we can all learn from. You know, like the transparency that they give to their customers.
Kevin: Then of course, we’ve got other new models like Better Homes and Gardens. While Better Homes and Gardens do the same as all the other groups, the difference there, I think, is in the person who is attracted as the broker to them. And that’s really what they’re playing off, as I see it.
John: Yeah, I think you’re right, Kevin. I think there’s also picking a different emotional segment of the marketplace from a brand perspective, if you know what I mean. Even just the name, Better Homes and Gardens, has more sort of feelings and emotions attached to it than all these others that have surnames and so forth within them. So I’m wondering whether they’ve just found a niche brand position in the real estate space.
Kevin: Yeah, so we’re seeing a challenge on branding. We’re also seeing a challenge on commissions because of some of these disruptors that we’ve already talked about. And they’re all going to be taking market share.
John: Look, undoubtedly. They’re all going to take some market share here, there and everywhere. But again, if you’ve got a strong competitive advantage, then you’ll stand out for that as your point of difference.
John: One of the things to deal with that I’m hearing people talking about, to deal with the challenging of commissions, is adding in the adjacent services. If your brand is positioned, if your offering is positioned around trust, then if they trust you to sell their property, will they trust you to do some of these other adjacent services that are linked to either selling a property or renting your investment property? I think that has a been a big discussion this year, the whole idea of adding in other complementary services.
Kevin: Okay, we’ll have a look at the tougher housing market tomorrow when John returns. John Knight from businessDEPOT. John, thanks for your time.
John: Thanks, Kevin.