Networked businesses face a tough future, incumbents worse
- Summary:
- Last week's launch of UK startup Plentific sums up challenges of frictionless enterprise and syndicated commerce
The secret of building a wildly successful new venture in today's digitally connected world is to find some way to remove cost, complexity and delay from a commonplace transaction — and take your cut as the money passes through. That's the secret of any of the money-making giants of the Internet age, from eBay, Amazon and Google a decade ago to today's up-and-coming generation such as Netflix, Airbnb and Uber.
Software technology and Internet connectivity are the enablers of this new model of frictionless enterprise, stripping away barriers to engagement to bring buyers and sellers together. The future belongs to networked businesses that successfully build the scale and reach to place themselves at the heart of those transactions in large enough numbers.
Trouble is, this is not easy to do. It requires a world-class idea, inspired engineering, relentless vision and a good dose of luck — and that's just to get started. Then you need to get noticed, because without customers and/or backers you won't have enough cash to build your network faster than your competition.
Last week, British startup Plentific became one of the latest to launch itself on this path. I met co-founder Cem Savas earlier this year and our conversation then set me thinking about the challenges the company will face.
I was intrigued because Plentific is a classic example of a networked business aiming to bring frictionless enterprise to a traditional transaction that's fraught with inefficiencies. As the founders stated in a press release last week:
"Plentific was created out of our frustration with inefficiencies in the UK property market. We recognised that property consumers and professionals deserve better tools and services, and with Plentific we're filling this gap using technology."
It's also interesting that this is a market where networked businesses are already established. For example, there's Zoopla, the property finding service that Plentific has partnered with. So Plentific is layering its own technology-driven service on top of other existing services in an example of syndicated commerce.
Plentific's aim is to join up all the disconnected functions that currently figure in house purchase in the UK market — not only finding a property but also negotiating finance, setting a budget, preparing legal documentation and completing the transaction. As Savas had explained to me:
"I don't think there's a platform that does what we're doing. If you're looking at the buying side, the way you buy a property is by going on a property listing site, contacting the agents [realtors], going to look at the properties and [when you've chosen one] trying to buy it.
"You have to learn about the process, you're using various sites that are not linked at all."
So for example, once your purchase offer has been accepted, you then have to hire a lawyer who initiates a search for required documentation with various authorities. Plentific has built in a process that shortcuts that process, said Savas:
"When someone has made an offer and it's accepted, you typically would hire a solicitor who starts the searches. That will take 3-4 days.
"What we do is integrate with a search provider. You'll be able to instruct a solicitor and pay on the site and automatically they will send a search package to the solicitor. Immediately you cut out 3-4 days."
The partnership with Zoopla is a mutually beneficial one, said Savas, because the property search service makes its money from introducing potential buyers to estate agents. Therefore teaming with Plentific simply extends its network to reach more prospective buyers:
"The way they grow is by providing leads to estate agents. Their strategy has been to be an open platform and partner with anyone from startups to banks, newspaper portals and so on."
Plentific hasn't yet partnered with banks and other lenders, but that's another potential area for partnership that could yield revenues from taking a slice of the transaction. For now the site contents itself with helping buyers work through the maze of housing finance. Savas explained:
"Most people have saved up money for a deposit. Our affordability calculator will actually tell you how much of the savings will go towards stamp duty [a UK transaction tax], take into consideration various lending criteria that lenders have and give you a range of house prices. From there you can search for properties."
The emphasis at present is very much on providing maximum convenience and help to buyers, as building up a network of satisfied users has to be the startup's first priority. Plentific also caters for property rental as many buyers are still deciding whether to rent or buy, said Savas:
"We truly believe in helping people. We've been there. If you're renting and you want to buy something, make the right decisions. So you can compare the renting to buying option — on financial terms as well."
Although the idea to set up Plentific came out of the founders' own experiences of renting and buying their own properties, the technology know-how to bring it to life has very much been based on big data expertise. In fact, as Savas pointed out, searching for the right property is an exercise in data research and evaluation that all of us do. Plentific's aim is to bring together technology resources that can automate that process. Savas explained:
"We're very focused on big data and optimizing that, making it easier for people to understand data. Everyone looks at big data when they're buying."
"We have some features coming out that will help people find neighbourhoods based on their lifestyles. The information exists but it exists on twenty different websites. Technology can help with that decision making."
The big challenge for Plentific, as I outlined at the beginning of this article, is going to be standing out from the crowd and gaining the visibility to build scale faster than competitors in an increasingly crowded space. Several other players were highlighted last week in an article in The Independent newspaper. But whichever of them succeeds, the story's headline singled out the incumbents as the real losers: Is this the end of the traditional High Street estate agent?
Image credit: Houses: © Tony Baggett - Fotolia.com; Founders picture courtesy of Plentific.