Is the demise of :Different the end of disruption?

The collapse of a disruptor

There were only a few raised eyebrows when the news broke at the end of last week that the online property management platform “:Different” had been placed in voluntary administration because of their inability to raise further funds to keep the business going.

This follows on the heels of Yabonza, another property tech company, going into liquidation a year ago and I’ve been told over the weekend that another is close to doing the same.

The Property Management sector needs disruptors to keep us evolving, it’s critical to the long-term success and viability of the sector that we continue to look at our practices and see where we can do better.

While the people behind the concept of :Different are highly experienced in using technology to solve a problem and have backgrounds at C-suite level in firms such as Uber and Google, I think they missed the mark by quite a way in estimating the level of acceptance that a product of this nature would have when dealing with something which quite often is the major investment people have outside of their family home, and to try to commoditise it down to a low fee was always going to be filled with challenges.

Managing a property and holding someone’s financial or housing future (depending on which client you’re talking to at the time) is a little different (pardon the pun) to catching a taxi and it needs to be treated with a higher level of respect and service.

There were a few things which contributed either directly or indirectly to their demise, and none of us should find any joy in this news, there are a number of people who will now need to look for other employment.

Firstly, the flat-fee model of revenue for most businesses is a path to ruin unless there is massive uptake of the product or service, and in an industry such as ours where costs (particularly salary costs) have risen greatly over the last 18 months, they had no ability to continue to pay the sort of salaries which would attract high calibre staff.

Ask anyone in the industry and they’ll tell you that it’s hard enough to get potential clients to see the worth of a Property Manager when most can’t differentiate themselves or their service offering from other Property Managers and compete solely on fee and you’ll see why the executives at :Different may have thought that there was an opportunity to take a share of the market.

Add to this that the nature of the model was one based around call centres, self-serve software and little to no interaction with anyone who actually knew the property, the tenant or the owner well at all; the majority of reports and conversations that I’ve had since their inception were focused around client dissatisfaction with the standard of service and knowledge of the laws, especially when there have been major changes in legislation in most states in the last 2 years. 

There’s also a sense that they tried to be all things to all people by competing with agencies for landlord-clients, and then trying to offer another service to agencies to manage their own landlords as a 3rd party provider – the industry view of this was one of cynicism, I remember having several discussions which reflected this and queried the profitability and sustainability of the :Different platform.

I’m all for disruption – I am one, I started one of the first Property Management-only agencies in Melbourne in the late 1990’s. Disruption and innovation keeps pushing us to find new and better ways of doing business; but we need to realise that we are in a people and human relationship business more than we’re in a “property” business, and for the client (and for us) the relationship has to be at the forefront of what we do and why we are in business. Any disruptor needs to be able to recognise that at the end of every interaction with clients (and I don’t differentiate between landlords and tenants when I say “client”), and the end of every interaction there is a human being with very human needs.

Sure, we need to offer a cost-effective service, but also one which recognises our expertise and our value.

As businesses we too need to remain profitable, and unless our overheads were to decrease at the same time, offering flat fee or fee discounts will only lead to us closing our doors and following both :Different and Yabonza.

Technology and platforms like this are not a solution, they are an adjunct to the relationship and allow us to concentrate on the client, they are not the relationship in and of its own as this will always remain a human one.

Sooner or later though, a company like these will learn the lessons from the collapses and find a way to make it work, market their service or product properly enough to have their message heard and accepted as an alternative and start to drive the industry to adapt further.

Sad for the firms that haven’t made it happen yet and the people within and behind them, but watch this space very carefully – the next disruptor might be just around that corner in front of you.