A Rock in the Fast Lane
Forgive me, but I had to laugh. It happened while I was attending a mock Shark Tank where three PropTech companies presented their tech to a jury of three established industry experts and a room full of real estate professionals (mostly accountants, but hey…). One of the tech entrepreneurs was pitching a piece of AI-backed sensor-based software that reads micro-vibration patterns: good for many things including people counting, presence tracking, and fall detection. This is where my laugh came from, as I was reminded of the “I’ve fallen, and I can’t get up!” awful catchphrase of the late 1980s and early 1990s that forever inserted LifeCall’s commercial campaign into pop culture (I’m a horrible person, I know).
Let’s be clear: this tech is amazing, no doubt about it. In the case of the above example, it can even monitor heart rate and breathing rate, something not just of interest to hospitals and child care facilities, but there is even application in the auto sector. But to be honest, there is an unmistakable Orwellian feel to all this surveillance technology purportedly intended for our better good. Yet what is just as interesting is what types of people agree with that sentiment. As I looked around the faux-Shark Tank room, I noticed I was easily in the upper 10 per cent age bracket (I’m not that old, but I guess old enough to remember that LifeCall tagline).
Underlying this huge tech revolution is a clash of generations. As the Saïd Business School at the University of Oxford in the U.K. said in a report on this emerging sector, “Many of the start-ups are driven by, and aimed at, Millennials, but they often look to Baby Boomers for money.” For this report they interviewed over 50 real estate professionals, entrepreneurs and capital providers. “From one side, we heard that none of these start-ups know what they are doing and that young entrepreneurs misguidedly regard real estate as a sure thing,” say the authors. “From the other, we heard that real estate people are not good at strategy and are determined to protect inefficient fee-earning practices.”
PropTech has been building such mass and momentum that the only real question now being asked is to what degree will it change the real estate business — one that is typically a slow moving asset class and highly conservative. The CRE industry would certainly love to know, and although nobody has a crystal ball, many are jumping on the speculation bandwagon. “Driving efficiency through automation is a key priority for CRE executives, and the use of AI and machine learning is approaching a critical mass,” say the authors of a recent Altus Group CRE Innovation Report looking at this topic. “Disintermediation is also driving emerging technology adoption. New business models associated with the sharing economy, co-working and e-commerce are disrupting the CRE industry by cutting out middle steps and processes to create greater efficiencies. The layers and stages of the financing, funding and transacting process create inefficiencies in many core CRE functions. As a result, the rise of disintermediating technology platforms and solutions are having a major impact on the CRE industry.”
A major impact indeed, yet I can’t help but see in my mind old film of high-speed stunt cars driving at full tilt straight into a brick wall. Eventually the wall explodes, but not before a mass of car wreck piles up around it. The key will be not becoming one of those wrecks. As one of the Saïd Business School survey respondents points out, “The majority of PropTech firms that will succeed are not those that are trying to be disruptive; they are the ones focused on delivering products that bring efficiency and alignment to the market.”