Kai Peeters encapsulates a unique quirk of 21st Century business owners; the mix of an intriguing, perhaps brilliant, academic mind with the demeanor and subversive attitudes of an artist. It’s a formula that has shaped our modern world and influenced the ways in which each and every one of us curate our lives and communicate our thoughts. As his company, HiP Property, prepare to undertake one of the property industry’s first ICOs, Will Darbyshire caught up with him to find out what he and HiP are all about.
Written by Will Darbyshire
In his Camden Town office of clean white lines, where whiteboards are inked with impressive looking calculations and a pair of record decks take pride of place, Kai sits across the table and lights a cigarette. Behind him, his business partner, Tobias Straessle, sits on a sofa, far enough away to relieve himself from the majority of conversation but close enough to monitor and occasionally contribute in a voice that edges on a whisper and delivers the English language through his unique Swiss-American sounding accent.
Together, they are two of the leading figures in HiP Property, a new company soon to launch a fascinating product that, in its essence, turns a property portfolio into a bank account. To add even more intrigue, the business will be funded, if all goes to plan, via one of property’s first ICOs, an increasingly popular alternative to Series A funding and one that operates entirely on cryptocurrency.
An Initial Coin Offering (ICO) is, in very basic terms, a crowdfunding venture mixed with an Initial Public Offering (IPO). A company chooses, or creates, a form of cryptocurrency coin, also known as a token, and investors use their own cryptocurrency to buy them much like traditional shares. It is, of course, far more complex than that, and you can read in depth about ICOs in this article, but for the purposes of this profile, I’m going to avoid going too deep into the intricate nuances of the process, covering only that which is important to the story of HiP Property.
HiP is not Kai’s first business venture, nor his second, third or fourth. He is a serial entrepreneur of typically varying fortune but always at the forefront of social and technological innovation.
“I had my first company at twenty-two, a consultancy which traded with top-tier investment banks. Basically, we mobilized global project change teams, competing with the likes of Deloitte, Pricewaterhouse, Ernst & Young, etc. Our pitch was, we will give the same standard and variety of service as those big names but at half the price.”
It flew, and Kai was signed up to Credit Suisse and ABN AMRO Bank, at the latter of which he had 25 people within six months and made five million in sales in the first year.
“I didn’t particularly enjoy the culture, nor environment, of banking, as much as it was financially rewarding, so I sold out to my partner and set up a Groupon-style marketing platform, helping consumer facing businesses interact with their VIP customers.”
This was two years before the likes of Groupon came along, and the company raised four million pounds in Series A funding. However, fortunes faded when the venture capitalist firm behind the funding had their £100 million fund fall apart and pulled out at the eleventh-hour. It was the day before the money was due to be handed over and, with just two months worth of cash flow left, Kai knew that new funding just wouldn’t come quickly enough, ‘especially in this country where nobody really understood what we were doing or prepared to take risks’.'I didn’t really have much interest in normal constructs; they’re just not scalable.”Click To Tweet
Kai then licensed out the underlying tech, chalked it up as a lesson learned and, over the next few years, moved on to luxury cars and then restaurants spending three or four years being mentored by an elder serial entrepreneur Graham Beswick. Together, they worked on multiple businesses in the world of entertainment.
“Then, I realised I wanted to get back into the world of tech because I didn’t really have much interest in normal constructs; they’re just not scalable.”
Kai met a ‘super wealthy property guy, top 300 kind of wealth’, when he took over and turned around an online gambling company that the gentleman owned, adding at least £10m ttv to the bottom line. For about three years, Kai ran the gambling company, including various social products that sprouted from it.
Then, in keeping with a story of restless movement, one could say romantic quest, he moved on and started a number of businesses in the realm of online gaming. More specifically, social casinos on Facebook. Wild West Casino and BitCoin Casino, they’re both Kai’s. After that, there was an online bookmaker built with Artificial Intelligence technology.
In terms of social casinos, Kai slightly missed the boat. By the time the product was released, player acquisition had gone from around two pounds per player to a figure closer to two-hundred-and-fifty. Another one bites the dust, as they say, but Kai is not a man who fears falling short, just so long as the experience was enriching and that he leaves with a greater understanding of the world around him.
When speaking to Kai, one gets the impression that financial reward comes second or third on his list of motivations and wants; there is much greater value to be found in the processes and the challenges; possibility is far more alluring than profit.
The early inspiration for HiP Property came to Kai while he was working under Terence Cole, the wealthy property developer. When he began putting the idea into practice, he spent a short while keeping his head down and building a product that he was happy with, one that was robust and self-standing, all the while exiting the gaming industry completely ‘’gaming was fun given the technology, but as a rewarding long term career embracing social impact, it’s not for me’. Then, in January 2016, he put together a team to really take HiP to another level. Now, in Autumn 2017, HiP Property is ready to launch.
“HiP is, essentially, equity as a currency,’ says Kai. ‘just like a bank account.”
“Access your property wealth!” offers Tobias, from the sofa.
The platform is centred around a gorgeous app. A 3D rendered virtual world jumps out of the screen, a perfect replica of every street and every building, the latter of which eagerly shoot up from the ground, begging to be clicked. When clicked, each building offers up various data points, including valuation and date of sale, as well as its place within in the context of current and predicted market trends.
“We allow investors to access their property wealth. You tell us the value of your building and the details your mortgage and then we set you up with a bank account style screen. From here, you see your equity and your debt for each individual property, or a total from your entire portfolio. Valuations are as close to real-time as we can achieve “
From the account screen, if a property owner wants to get access to some cash, they can simply sell a portion of their equity. It’s all done with two simple red sliders. Slide one to set how much money you’re looking to raise and the second moves accordingly to tell you how much equity you need to sell. For example, to raise £20,000, 12% of your equity needs to be sold.“We have created virality in the property market...creating a public, decentralised system.'Click To Tweet
Once a user has been audited and fully set up on the platform, they can make these types of decision every day, all day, from anywhere.
“When a user has made their choices and clicked ‘go’, we push those into a trading exchange to turn them into investable assets. But if you are thinking as a homeowner you don’t want investors looking over your affairs, you don’t need to worry. This is not about challenging an owner’s rights but allowing others to participate in the economic benefits. Keeping anonymity in the residential market is key, for instance.”
The key to HiP’s service is that, rather than relying on SPVs, they have agreed ‘’special terms’’ with the FCA to approve an entirely new way of operating that allows the owner and investor to commit to debt and equity trading in a more flexible way. This agreement also leads their ability to publish to the blockchain like no other before them.
The whole process is radically streamlined compared to that which one would normally expect from a property or financial transaction.
This streamlining is due, in no small part, to the intuitive messaging system included on the HiP platform. Within messenger, lawyers can come in to edit and review essential documentation and contracts. The documents themselves are also stored and fully accessible through the messenger. Investors are able to keep an eye on the dialogue and the whole legal process can now be done in real time.
“We have created virality in the property market by changing key corporate processes and creating a public, decentralised system. So, if HiP were to turn off, the 10,000 properties we had trading on the market place would be secured by a legally viable ledger. That means that all of the assets can be managed outside of their relationsHiP with HiP.”
Kai and his team believe that the traditional market place has too much of its profit stripped away by the high-cost environment in which it dwells.
“We want to create a viral property company that just…”, he takes a beat to think, “…flies.”
If you’re thinking that this all sounds incredibly complex, you’re completely right; it’s a wildly intricate and meandering game of interactive debt and equity that very few of us need to know the rules to. But if there’s one thing Kai prides himself on, it’s the ability to surround himself by people far more intelligent he, one for each area of expertise that he himself does not have.
And that’s where the softly spoken gentleman on the sofa comes in. To say Tobias Straessle has a wealth of experience would be a futile understatement, but I simply don’t have the word count to regale his entire history. He is a man whose influence resonates throughout the financial industry to this day, for Tobias created the world’s very first electronic trading system. As Kai puts it, ‘he took pit bull-like, yobo-fighting-broker-nutjobs in the pit, and turned them into slightly more educated, computer based cocaine addicts.’
Tobias has worked at, innovated and revolutionized a huge number of public and private financial institutions around the world. When it comes to the complex disruption of debt and equity, there may not be a better business partner alive. And he’s just one of a dozen or so figures involved with HiP, ranging from property tycoons and agents to designers, coders, and entrepreneurs, each one of them with a CV more extraordinary than the last.
HiP has worked out a suitably unique way of doing things when it comes to attracting and rewarding skilled contributions to the company.
“We have created an energy system that people can tap into and provide a service for which they then receive a reward. We believe in a culture and model that is quick to engage people and reward them for time and energy.”
Doing things slightly differently is at the heart of HiP. It’s a way of thinking that has enabled them to paint the property industry from angles that no one has ever attempted before. A good example is this:
Say I own a property and I have debt but I decide, for whatever reason, that I don’t want to pay my mortgage for a year, I simply don’t pay it. Because my portfolio is on HiP, when I don’t pay, they just take the proportional amount of equity out of my building each month, say £500. They then give this equity to the investor instead of cash. The investor can then either sell it on the market place or keep it. And because HiP resolves all debts on a monthly basis, I will never go into be evicted for three months of arrears, as I could be under a traditional model.
Taking HiP into The Future
“The UK is just the model for a global rollout,’ says Kai. ‘We can map any country in the world, in its entirety, in four weeks; we just did Italy in three.”
But global domination isn’t HiP’s only aim. They want to revolutionise a whole swathe of property’s current business practices.
“We have chosen to focus on commercial initially because, in any given building, there are four opportunities for returns on investment: equity appreciation, rental income on equity shares (dividend kickers), mezzanine debt (bridging debt) and senior debt (like a mortgage). As such, it’s a far more attractive prospect for potential investors.”'We're looking to raise £100 million.'Click To Tweet
However, looking forward, the residential market is most certainly in play. One particularly pertinent goal, given the market’s current crises, is to address the idea of affordable housing. HiP want to help first time buyers get on the ladder by helping them buy property incrementally.
“Say, for example, you’re looking to buy a million pound house. Just tell us how much you can afford each month, as well as how much you have for a down payment, and we will calculate how much of the building you can afford to purchase.
“If that figure comes out as 70%, the remaining 30% can be bought, as equity, by investors. Over time, as your income increases, you can start buying that equity back, one piece at a time.”
To ensure that an investment of this sort is attractive to investors, HiP compute what the potential return is and measure that against the possible risks, focussing more on the building and its location than the individual wanting to live in it.
For now, all of Kai’s focus in on the upcoming ICO. But once that has closed and funding has been secured, HiP has an aggressive rollout plan to prompt user uptake.
They have an eclectic team of unrivaled experts waiting to be released, each one unique in their area of expertise. Their job will be to bag the HiP product and take it to various companies and establishments to see how it could be utilised and specifically tailored for that sector.
One such example would be the UK Government. Imagine, if you will, that all of the government’s assets were on the HiP platform. When it came to raising money to fund public ventures, rather than having to sell property assets to individuals privately, they could simply give up 5% or 10% of equity and thus maintain far more of their property wealth.
The same theory is applicable to property developers with billions of pounds worth of investments. In order to fund a new development, rather than having to go to the bank for financing, they just sell some existing equity. Because everything on HiP happens in real time, this is a uniquely viable alternative to traditional financing.
And there’s more; HiP hope to speed up and give ease to traditional planning processes. They plan to allow users to take the virtual version of their property from the 3D HiP world and add extensions, changes, etc, to it before placing it back into the world to see how it looks. This can then be viewed and commented on by various stakeholders. It’s a double-headed technique that both reduces the chance of conflict and brings down unnecessarily lengthy timelines. At the moment, the planning of your property’s extension will have to be completed by an architectural designer, for a fee. Eventually though, it will be a SimCity-style case of drag and drop, a feature which promises to be perfectly in keeping with the HiP app’s keen focus on intuitive usability.
And thus, the ICO
The sheer scale of HiP’s vision is the driving force behind their choice to fund the company through an ICO.
“The amount of funding required to bring our various visions to fruition is unprecedented.’ says Kai. ‘A Series-A funding round, here in the UK, would take six months and result in anything from £2.5 – £5 million. An ICO, on the other hand, might take six months but can deliver anything between £15 – £100+ million.
“We’re looking to raise over £100 million to act as the liquidity required to fulfill the initial applications that come through, some of which we already have.”
Operationally, Kai says they only need a fraction of that hundred mil, perhaps 15 -25%, to help secure the product in the UK and two more countries. The rest of it is needed to finance applications right off the mark and progress the platform sufficiently so that the world’s truly giant liquidity providers can interact with it. If HiP can achieve that, the financial returns will be, quite simply, staggering.
By the end of my interview with Kai, the rain is falling so dramatically outside that the racket on the roof drowns out the majority of thank yous and goodbyes. Over the course of two hours we have covered ICOs, the financial markets, property markets, the pros and cons of various tobacco brands, the friction between tech and tradition, the one true perk of coworking spaces, innovation, failure, success, a mutual appreciation for the Yorkshire accent, and the necessity of trusting that people will do what they say they will do. But the overriding theme of everything has been the importance of doing what you believe is right, regardless of what others consider good or bad, stupid or smart, safe or risky, and how best to balance that with what the rest of the world is ready for and expectant of.
Kai Peeters is a man of elastic talent, and what stands out most is his ability to conjure complex solutions for even more complex problems and, from that, create a unique and sprightly ideology. As they sit now, at the brink of an ICO, one has to admire the courage that HiP are showing by taking an unquestionably brilliant platform, one which could easily find funding through traditional avenues, and forcing it through an innovative and unnerving funding process, all with the sole purpose of bringing a product to market which is unfettered by the limitations of traditional business and in keeping with Kai’s vision of how the world should work.
HiP is always looking to increase its active investor pool with value added investors and partners – if you think you’ve something to offer, Kai is more than happy to have a chat – [email protected]