This week we were joined by Magnus Svantegard, Head of Product Management at Datscha, a leading provider of information and analysis for commercial property.
You can listen to the podcast in full via the link below; alternatively, you can read the full transcription underneath.
Full Podcast: Datscha
A huge thank you to Magnus for taking the time out to chat with us.
You can check out the entire archive of PropTech Podcasts here.
(Music until 0:00:13)
Eddie: Hi everyone, welcome back to the Proptech Podcast. In addition to the normal news and events round-up we are joined by a longstanding member of the proptech community Magnus Svantegard from Datscha.
As always, I am joined by esteemed host, Mr James Dearsley, hello.
James: Esteemed, I like it, yes, hello.
Eddie: Only a man wearing a green corduroy jacket could be described as esteemed in this company.
James: It’s my [floral] handkerchief I like.
Eddie: It’s very, very fetching. We’re going to have to start live streaming this, so you can see-
James: No green trousers this year though.
Eddie: Yes, #greentrousers you’re officially known as now.
James: (Laughter) Blame Rightmove for that one.
Eddie: Okay, I will. Rightmove, you’re fired.
James, I don’t know if you picked up on this, but the Twittersphere has been going crazy this week in discussion of your beekeeping, as we discussed last week. Are you interested in maybe putting on some classes for folks?
James: Yes, why not. Proptech beekeeper.
Eddie: I read this about you.
James: Go on.
Eddie: Sounds like a great guy, with a great attitude. Would love to have a chance to sit down in a pub, drink a pint with him, and just shoot the breeze. Do you know where that is? Do you know who said that about you?
James: (Laughter). Yes. I do. That’s the saddest thing about it.
Eddie: Are you going to tell us?
James: That’s a review, isn’t it?
Eddie: That is a review. Of?
James: Yes, yes.
Eddie: Just a little thing. A book. After you dropped Ed Bartlett from KyKloud in it a few weeks ago with his, “Check Amazon out and see Ed’s book reviews,” I did exactly that. This is a review from GoodReads of ‘From A to Bee: A Beginner’s Guide to Beekeeping’ from the published author, Mr James Dearsley. Fabulous reviews. Fabulous reviews.
James: Thanks, Eddie. I’m so pleased we prep for these before we start. I’m so pleased. Thanks mate.
Eddie: It just wouldn’t be [craick 0:02:04] if we were too prepared.
James: It’s alright though. There are a few little five stars in there, it’s not all sad ones, it’s alright.
Eddie: You should be absolutely proud. The reviews are overwhelmingly exceptional.
James: Come on, it’s proptech, it’s not beekeeping, let’s move on, come on.
Eddie: Right, okay. Let’s do some news.
James: From A to Bee, you can get it on Amazon. (Laughter)
Eddie: Good plug, good plug. Royalty checks not coming in?
James: They’re shocking. I can almost buy a mousemat each year, it’s good.
Eddie: Alright, now look, let’s talk about something else beginning with B. Tell us about the Blockchain news from Georgia, of all places.
James: Well, okay, first bit of news. I mean, Blockchain has been one of my passions for a couple of years now. First real reinforcement, support for it, the National Government of Georgia have got behind it, and the company [Bit Fury 0:02:52] to register land titles on a Blockchain, a Bitcoin Blockchain. So it’s big news for that sector, but it’s been in talks for a long time, so the first of many, I hope.
Eddie: At risk of making an inappropriate comparison to [a dam 0:03:06] given the events in northern California at the moment, the first few drops coming through the crack in the dam of Blockchain for technology…?
James: Yes, I saw that this morning, that’s mad, they’ve had to evacuate a village of 16,000 people.
Eddie: 200,000 in total I’ve heard.
James: Oh God. But no, for this, for Blockchain, it’s good. I mean, there are a load of projects going on at the minute in terms of identity and land registry titles, there are a few companies out there, [ChromaWay, Factum, Velux, Bitfury 0:03:30], a few. I think ChromaWay is actually in Sweden, so one of Magnus’ compatriots really. So, interesting stuff at the minute.
Eddie: I think you and I are of one mind that this is going to be one of the most important technologies for the property industry.
James: It could be one of the least understood and one of the most important. For me, I think everybody owes it to themselves to realise that we need a more decentralised system of hosting documents, identities in the cloud, which are immutable and unhackable. I think this is the first step forward, hopefully, and actually you don’t know this, Eddie, but we’ve actually had about two or three emails from people who want to do a Blockchain based Proptech Podcast. So it’s one very much I think for everybody to understand that little bit more, because it is mysterious and-
Eddie: Wow, sounds good. If anyone else is out there that’s got views on it, give us a shout.
Some news announced today by Propteq, one day we can stop referring to it as ‘Proptech with a Q’, the event run by Brian [Brosnan], they’ve announced CBRE as main sponsors, something of a coup for them.
James: Mm, yes, it’s a good move really. I think actually from both parties, really, and I think it’s part of the reason why they had to separate the dates off, because it means that now there’s a reason for different advertisers to get involved. So good on Brian and his crew.
Eddie: Yes, well done guys. Now, one other piece of news today, hot off the press, is the shortlist announcement of the Property Week Proptech Businesses of the Year, amongst a range of other categories. Now I know that you don’t know who’s in this list yet, James, so I’m going to run these past you and get your instant live reaction. Are you ready?
James: You’re a bit overexcited, but yes, go on.
Eddie: I am excited. Apologies to Magnus, it’s not that I’m leaving you out, you’re just not in this list. Guess you need a new PR.
James: Magnus is right by us, by the way, at this point.
Eddie: Okay, Proptech Company of the Year shortlist includes [CompStak] – this is in alphabetical order – Hubble, LendInvest, [MAT Report], VTS, WiredScore, Yardie, and [YOPA].
James: Blimey. Quite a lot of Americans coming over here to take the crown. That’s quite a list of bigger firms.
Eddie: It is interesting that they couldn’t find more UK or European based firms for that list.
James: Yes, that was my first, first thought on that.
Eddie: CompStak and YOPA, they’re on here for the most entertaining marketing campaign of the year, with the YMCA and the Village People cover on the TV ad. Did you see that?
James: It was quite a good ad. Were there any more reasons given? Any more talk around it at all?
Eddie: No reasons whatsoever. I’m not sure exactly what criteria has been chosen.
James: So very commercially led, very American over to the UK led, big companies having big acquisitions, big money, big funds. It’s not really supportive of the young guys, I’m quite surprised by taht.
Eddie: Not massively. LendInvest in there as well, interesting that they bridge that gap between fintech and proptech, it’s still very much a part of the proptech scene. Well, time will tell, perhaps more information will come out.
James: When does the winner get announced?
Eddie: When does the winner get announced, that’s a bloody good question. It happens when you book your place for the ceremony, and I can’t… 4th April 2017.
James: Okay, so pick a winner out of those. Who are you going for?
Eddie: Oh well, it would be terrible to sit on the fence, wouldn’t it? I would vote Proptech Company of the Year out of that list as being LendInvest, because of the scale they’ve achieved already, and the amount of transactions they facilitate. I would probably also choose VTS purely on the size and scale, and based on what Emily Wright said to us last time on the podcast on the impact that deal with Hightower has had on the property industry.
James: Yes, that’s my thought, and I have to say that would be the one I’d pick out, VTS, if I’m honest. I don’t know if it’s- My only thought is whether it would too early on the deal to see-
Eddie: Well they have to justify the valuation now somehow, right?
James: Yes, well, they do. It’s whether or not they can prove that they are the best company out there at the minute now that they’ve been acquired and are working together. Magnus, your thoughts on those ones?
Eddie: Yes, that’s enough of this chit chat, welcome, Magnus, to the Proptech Podcast.
Magnus: Thanks for having me.
Eddie: It’s an absolute pleasure. I know that you’re due on a plane back to Stockholm soon. Now, aside from the obvious displeasure at not being on the list, your thoughts?
Magnus: Yes, that was a hard one to ___[0:07:52] to be on that list, but I think I would put my money on LendInvest, I think they’ve made a lot of progress, especially in the last one to two years. But if you take it from the noise perspective, of course, VTS will ___ well of winning that one.
James: I think you’re bang on. I think if they take away the acquisition side of things, then I think VTS is definitely there, otherwise I think LendInvest.
Eddie: Well I think we should be voting for CompStak or LendInvest as they have both been on the podcast before.
Magnus, tell us about Datscha, you must laugh when you see all this buzz around proptech at the minute, because you were telling us earlier, you’ve been to MIPIM for 16 years in a row, all of which in some capacity to do with technology, so proptech, is this 2.0 at the moment? What was 1.0? Tell us a bit more about the story behind the business, and your background too.
Magnus: Well thank you, a pleasure being here. Yes, this will be my 16th MIPIM this year, coming up in a few weeks. So yes, it’s not a new thing, so to say. I mean, when it comes to proptech I’m absolutely delighted with all the focus and all the articles and all the buzz about it, because I think it’s what we need. I mean, for many, many years we have been fighting to be in the spotlight and tell our story and so on, so I love proptech. However, that aside, it’s not a new thing, it’s not invented with the hashtag on Twitter, and I’m very much in line with [Jim Young 0:09:25] at [RealCom] who did a blog post about it, that it’s actually the fourth wave of proptech. So I think that’s very, very good.
Datscha, so we are a data business in the commercial real estate market. We are a research intelligence platform for the commercial proptech industry. So we have data on 30 million properties, we have the ultimate owners, we have market information and in the UK for example we have flooding, and data from Oxford Economics. So everything is put together in one platform to make the commercial real estate market more transparent.
So our users are investors, property funds, landlords, consultants, the banks, and of course, all the agents, everything from investment agents to letting agents and so forth. Datscha as a company, we’ve been around for 20 years, we are based in Sweden and went to Finland in 2010, and launched in the UK about a year ago. Business has been tremendously good here, so we’re growing, we now have eight people on the ground here.
Eddie: And what’s your role in the company?
Magnus: I’m Head of Product.
Eddie: Tell us more about what that means for- We get a lot of people from the property industry listening, who might not quite have that sort of job title in their companies.
Magnus: Yes, maybe they should have.
Eddie: (Laughter) That’s a different conversation.
Magnus: So, Head of Product, what I do on a daily basis is to meet with end customers and our sales people and translate the needs of the market to our software developers, that’s pretty much in a nutshell what we do. If you take a software developer and put him in a room with the client, they normally don’t understand each other 100%, they misunderstand each other and maybe focus on the wrong thing. So a product team is in the middle and decides, “What should we actually do? What actually does the client need?” Because I strongly believe there is a difference between what someone says they want, and what maybe they need. That’s particularly true when it comes to software, but you can take it even to construction, if you want to push it.
James: So, bearing in mind you’ve been 20 years in Sweden, was that one of the biggest challenges when you came here, in this last year, is presenting- ?
Magnus: Being in Sweden, coming here?
James: It’s not that far, we’re alright. But no, I mean the product of what Datscha has presented, I mean, obviously they’re very different markets, I would assume.
Magnus: Absolutely. I mean, we were talking about American companies coming to the UK, they are quite often talking about the nuances between countries. I strongly believe that there are no nuances between the countries, there are massive differences. I mean, one of our main areas is of course data on the property, so what type of property is it? What is the size of the property? Who is the owner and so on? You may think that a property is always a property, but the data sets that are available differ intensively, much, between different countries.
The way a property with freehold and leasehold and that set-up here in the UK differs a lot from how it’s set up in Sweden. So from a pure database perspective, you pretty much have to re-build the new version for the UK market. So that differs a lot.
Of course, also the client side, just one example: letting agents. If you walk into one of the large agents here, in their London office, it seems that 70% of letting agents, the investment agents are sitting in one corner, and the valuation team in the other corner. In Sweden, there are not that many letting agents. I would say that 90% of all office letting is directly from the property owner to the tenant. So you don’t have letting agents [on both side 0:13:41]. I’m not saying what’s better or worse, they’re just totally different markets.
So what data sets are available in the commercial property market differs a lot between different countries.
Eddie: And you spent a lot of time thinking about, or working on your international expansion to the UK before you physically established yourselves on the ground here, right?
Magnus: Yes, I mean, we started- The story with Datscha is that we are actually a spin-off from a large property consulting firm in the Nordics called [Nusek 0:14:15]. So it’s a sister company nowadays, they have 1,000 people employed, all over the Nordics. So we were a spin-off from that in ’96, and that was just off the real estate [crisis] in Sweden where, especially the banks, started to think about how do they do the processes in the underwriting process? What data is available? What services do we need? And so on.
So from that, Datscha was born as a client service ___[0:14:49]. But then in the year 2000, with the internet boom, we raised capital and were spun off from Nusek [AB] and started as a company on our own, Datscha AB. I mean, for everyone who remembers [the dot com], everyone was aiming for global dominance. We had some fantastic slides with our roll-out plan from Boston Consulting Group.
So already, back in the year 2000, we started to look at England. But we really, as with everyone else in the dot com crash, really had to scale down and start to prove our business, and prove our profitability in Sweden, and then take it from there.
But we really started to go into England like five years ago, it took us almost five years to launch here in the UK, but that was not due to product development, it was not due to finding-
Eddie: Well I should hope not, or you wouldn’t have a job, surely, by now. (Laughter)
Magnus: Exactly. It was not due to the market demand. It was purely due to the fact that the English land register hadn’t started to release their data. They were supposed to do it within a year, in 2012, but it took them four years to actually start to release their data, and our base product is really dependent on being able to buy good property data from the land regs.
Eddie: So, going back, we usually have people who would come on the podcast and say, “Hey, I’m the founder of this business or that business.” You’ve been involved in Datscha from the very, very early days, right, but you don’t call yourself a founder. How does that all tie together? I’ll quickly cover for you while you have a big chug of beer. (Laughter)
Magnus: Thank you. Thank you very much. So, Datscha was founded as a client service [software 0:16:42] back in ’96, and I joined just when we actually had taken in some external money, we raised some capital and we were spun off from this consulting agency. So that’s when I joined the company, so I can position myself as a founding employee, for sure, but I’ve never been MD. I’m very pleased to be Head of Product, and that’s [where] I do the best value for money, for sure.
James: Okay, so going back a stage, looking at you coming over to the UK, one of the points, one of the comments that we hear a lot, is that we’ve got a big old boys’ network in the UK, full of the old school property agents who’ve always done it the way that they do it, they run the biggest asset class in the world from Excel spreadsheets etc., etc.
I suppose my question to you was, was that a big barrier to entry for the commercial data sets you were after? Then a question in addition to that, and it came in from Josh [Artus 0:17:43] earlier on, which was asking what the tipping point of proptech is, to get these old boys’ networks to understand that what companies like Datscha are doing is going to influence their business.
So, primarily, was it a problem? Secondly, what’s the tipping point?
Magnus: The set-up with the old boys’ club, I mean, I think that’s true for every country when it comes to commercial real estate.
James: Sweden too?
Magnus: Absolutely Sweden too. I mean, the real estate market is an interesting one. Absolutely massive market, if you think about the market size in terms of value. I mean, you can throw around [trillion dollars 0:18:28] of the value, but that’s not the market for proptech, that’s the value of the assets.
In commercial real estate it’s very much concentrate to quite a few companies, if you look at the owner side. I mean, go to any country in Europe, it’s normally a handful of very large consulting firms, and then nothing, nothing, and then a very long tail of smaller companies.
So that was exactly the same thing as in Sweden or in Finland, and that is not a problem when it comes to launching in a country. Of course, it could be a challenge to sell in to them on a massive scale, since they are such big companies and selling to a large enterprise takes a lot of time. There are a lot of people involved in different types and parts of the business and so on. So that’s very much similar.
Having launched Datscha in Sweden, Finland and the UK, the story is very similar. We’re coming in with a value proposition that is a bit different, for sure, to many of our competitors, and many of our potential clients are very successful companies and making a lot of money, as of today, so why should they change their business? So it always take a little bit of time to convince them that they could be even more successful, they could find better deals, they could do their work in a quicker way, they could serve their clients in a better way, faster than they were doing before.
James: So it’s a [truly 0:20:10] education stage isn’t it, really, where these guys have to realise what the value you bring to the business is.
Magnus: Exactly. So that’s the challenge for our sales people, is first to have to educate them, and have them try the service. What normally pays off, and we see this same pattern here in the UK, as soon as we have the client start using the service, they really see the value, they can’t stop using it. It’s like mobile phones. You were perfectly happy before the mobile phone came into the market, but as soon as you-
Eddie: I had a pager and a PDA, thank you very much. I was waited with bated breath.
James: Wow. PDA.
Eddie: That’s such a sad admission. (Laughter)
James: Was it on your belt?
Eddie: It was in my leather holster on my belt, thank you very much.
James: (Laughter) Did it have a little clip, where you had to open it up and take it out?
Eddie: Of course, like a gun.
James: You must have been so cool.
Eddie: That’s one word for it. (Laughter) Anyway, sorry, we distress. I hope Datscha is not like the PDA that you’ve got to attach from a leather holder. You’re cooler than that, right?
Magnus: No, it’s more like the iPhone.
Eddie: Yes, okay, I wouldn’t go that far.
Magnus: (Laughter) So it’s very similar-
James: But just to bring a point and to roll that- So you found the same resistance in the UK as you had in Sweden, it’s a country problem, we’ve got an old boys’ network, it’s always the same. So, I suppose, coming into the second bit of that, have we reached the tipping point?
Magnus: No, I don’t think so.
James: So what will that tipping point be? How will the old boys’ network realise that technology is there to help, not hinder, and [then it can transform 0:21:49].
Magnus: Well, first of all, when it comes to proptech, from my standpoint there is one thing that you really need, and that is endurance. You really need endurance. There are no quick wins in the market.
Eddie: Okay, let’s discuss endurance, Magnus, because a little birdy-
James: You diverted that away so well.
Eddie: – a little birdy told me that you were into the odd endurance event away from this proptech endurance event.
Magnus: I have a little bit of that background, yes, as James also has.
James: I do. Not as much as you. I haven’t got my own personal website discussing triathlons.
Eddie: And endurance swim runs?
Magnus: Yes, that’s the new thing.
Eddie: What’s the – I can’t say it – the ___[0:22:31] or whatever it’s called.
Magnus: Yes, that’s a crazy competition in Sweden. Of course, like all big sporting events in the world, it started with a bet.
Eddie: And it got out of hand.
James: It started with a bat?
Eddie: A bet.
James: Oh, a bet, I was thinking, “Where is this going to go?” I had no idea. (Laughter)
Magnus: So yes, it’s a competition where you swim and run. So it’s not a triathlon, there’s no cycling, and there are no transition areas, as in triathlons, so you keep all your running gear and you pick up your running shoes when you go for the run.
So swim run you swim in your wetsuit and you run in your wetsuit too-
James: If you’re in a wetsuit it doesn’t count. Even in Swedish waters, that’s it.
Magnus: It’s hosted in September in Sweden, so…
James: Yes, okay, fair enough.
Magnus: It’s like 9 degrees in the water, so you need it. No, it’s for sure an endurance run.
Eddie: Is it 75km, something like that, did I read?
Magnus: Yes, 65km running, and-
Eddie: And you’ve done this how many times?
Magnus: No, only one.
Eddie: Just once. Once was enough, was it? That is amazing.
Magnus: It was a good one. I’ve done [two ___ 0:23:44] but one-
Eddie: Okay now you’re just showing off.
James: There’s a good few proptech triathletes out there.
Magnus: Yes. Triathlons seem to be very big in the UK property market.
James: Just thinking, you’ve got, what’s his name? Lawrence, from [Paperchain 0:23:58], he’s an Iron Man. John Williams from [Instant Offices], Iron Man. There’s a few of them.
Magnus: Yes. [It gives] people the trust.
Eddie: You’re just shaming me.
James: I wouldn’t work with them, it would be a nightmare. But they’d have the endurance, as you say.
I want to go back on that point, because I think it’s really important about the old boys’ network, and the tipping point as to how to get them to understand that tech is changing.
Eddie: They’ll just die, James, eventually. Maybe that’s the tipping point. Or retire.
James: Well yes, probably sooner rather than later, but I would say there’s a serious aspect where there’s an education needed for these people, that it’s not going to- One of my philosophies on this, and I think I said it a couple of times, is, there is an inherent risk of people who have been in the industry for a significant amount of time who have built their brands and their businesses on what they know of the sector. The moment we’ve got technology coming in, which they don’t understand – and we understand they don’t understand it – they won’t risk their business, let alone their own personal reputation, on a punt.
I think there is an inherent risk for the tech companies to try to influence that. So, how do, in your opinion, they get in to educate that sector? You’ve done it in Sweden, how did you do it there? How are you going to do it in the UK?
Magnus: You really have to be very, very persistent. You can’t jump into it and be frustrated that you don’t have a quick win. It’s a very long road to go. You need to be very helpful in training them. You have to have software that is extremely user friendly, and easy to use, and really gives them quick value for money, so to say. So you have to have some quick wins when you show them your solution, otherwise it’s very, very hard.
But there is no secret sauce in my opinion; you have to have a great service, and you have to have the endurance to help your client to evolve. So maybe you manage to have some of the junior people, the ones who are doing the research, trying to find [off market 0:26:09] deals, looking into markets where they haven’t spent 20 years and know everyone. You have to have them start using it, and then also promoting the service to the upper management. You have to do it top and bottom at the same time.
Eddie: It’s quite a classic tech adoption strategy in B2B is to have a product that the people on the ground can actually get out and they can use, without the approval, or necessarily the sign off from the guys right at the top. Then it becomes ubiquitous by stealth, almost.
Magnus: I mean, it’s [quite often 0:26:43] when you’re in sales meetings and you have both the manager and the junior analyst in the same meeting. Maybe the manager walks away at the end of the meeting and is a bit hesitant about whether they’ll use the tool, and then the junior analyst says yes, helps you out of the building and they say, “Well, we really need this,” with the reason that the managers are normally used to receiving all those reports. So they don’t see the point.
Eddie: Yes, so they don’t realise how hard it is to make them.
Magnus: Exactly, because they have forgotten that 15 years ago they spent two days figuring out who owns the biggest industrial properties in Leeds. That’s the junior guys now doing that work, and those guys really normally see the benefit of having a good software solution to do research intelligence on the property market.
Eddie: It makes sense. Can I come back to the experience you’ve had on the international markets? Regular listeners will know, one of my bug bears is a lack of expansionist attitude amongst UK based proptech companies; very few of them go into other countries. I’m interested in your thoughts on how early in their journey these companies should be thinking about doing it, bearing in mind what you said around the nature of your business makes it slightly harder and longer, because you rely on data sources being available to purchase.
James: Cool, good question.
Eddie: Thank you, James, you can come any time.
Magnus: Well, first of all I think that the property business is very local. You can look at any part of the sector when it comes to what types of software are available. For example, you could look at property management systems. I would say that there are five to ten property management suppliers in each country in Europe. I’m not an expert in property management systems, but I believe there are very, very few property systems that are in more than three countries. There are some really big ones, but they are not used extensively in each country. I mean, you can find, for sure, users in every country, but they normally don’t reach the massive critical mass in every country in Europe.
I think that’s true for all types, if you look at the systems for the lettings process, or if you look at the listings services, or even property data services, there are different suppliers in each country. Unfortunately it’s a tricky question there, because they don’t have the opportunity to be very big or very successful company in any of those countries, so they by themselves maybe can’t go internationally. We are happy to be having a very profitable business in Sweden, and also very strong owners in [Stronghold Invest 0:29:40] that are a property company-
Eddie: Sorry, that was just James’ knee creaking from all the triathlons he’s been doing. Sorry, Magnus.
Magnus: So we are in a lucky position to have that possibility. The other way to do it is to raise an enormous amount of money and go for the big jumps, which very few have been successful.
Eddie: But it’s interesting you talk about that fragmentation in that market. You see it across all markets. I wonder if that’s a legacy feature from technology for the property industry from the past 10, 20 years or so. In fact, this new breed of technology business is built on more recent principles of starting businesses, if there isn’t in fact a chance to vastly reduce the numbers of suppliers moving forward, why do you need so many different CRMs, for example?
Magnus: For sure it’s easier nowadays to build and launch a web solution that you [go for 0:30:40] many countries. Remember, we had a client server solution where you sent the data updates by CD ROM. We actually had to borrow ___ databases to our clients that didn’t have a ___ database. So of course there is a massive difference in launching a service.
The problem though is that the sales process is the same, as we discussed just a few minutes ago. So it doesn’t really matter, because you need to have people on the ground, you need to book those meetings, you need to go there in person. I would say there are very few proptech companies with a self-service set-up that just explode suddenly in a new market. They may exist, and congratulations. But you need to be there in person, you need to go and sell to clients, find them, and convince them.
Eddie: And this takes a long time, to get the foundations in place, right?
Magnus: Exactly, that’s what takes a long time.
James: But equally, I think it’s interesting, because the amount of times we all hear – and I’m sure you’ve all heard it – “We are going to be the next AirBnB of proptech,” “We are going to be the Uber of proptech.” It’s not going to happen.
Eddie: Not with an introspective attitude that says, “Oh no, we’re not going to New York, we’re not going to Johannesburg, we’re not going to Sydney or Hong Kong.”
James: So how can you be the Uber of, or the Amazon of, or whatever. I heard one recently saying they were going to be… Some nutty one. But they can’t be. They can’t have that international perspective. Even if they’re a [SAS 0:32:11] product, a data product. I find it very hard, I think it’s a very ___ idea.
Magnus: For sure, at least it’s very, very hard. If you compare yourself to Uber or Facebook you should keep in mind the enormous amount of money those companies have raised to make that-
Eddie: Yes, it’s a virtuous circle though; you need to raise the money to prove you can expand in a different territory, once you’ve proven that you can raise more money to go and do ten more territories. So it’s not just a case of saying you need all of the money to do all of the expansion all at once, right? There is a process that… I’m going to get off my high horse soon, don’t worry.
Magnus: But it’s also, if you look at the companies that have been around for 30, 40 years, very few of them, I would say, actively have a big market share in more than three countries.
James: Okay, so on that basis, I think one of the things that I believe in this, is that it’s harder for a software based proptech company to become international than it is for a hardware based company. I think there are a few hardware based proptech firms that probably have got more of an opportunity, because it’s hardware. But on that note-
Eddie: I would say to you on that point, James, that the asset class itself is largely standardised across all different countries, apartments, industrial, so on and so forth. So, the underlying dynamics of the reason we’re all here talking, the property itself, I think lends itself to businesses having much broader reach, they just need the right venture funding and they need the right attitude from their teams.
James: And the right people on the ground.
Magnus: Well it also differs a lot. If you take the residential market in Sweden and compare it to the residential market in England, it differs enormously, the way it’s set up. We have the rental system in Sweden, we have the co-ops that don’t exist here, I mean here you have these-
James: But you could bring upon the example of Blockchain, which we mentioned earlier, which is ChromaWay in Sweden is having a field day because it’s got a structure, a legislative structure that suits it. We couldn’t bring a Blockchain company here and start up like ChromaWay did, it’s not going to happen for a long time.
Magnus: It could be. In a way it’s a bit funny that the Blockchain is starting to do some live testing in Sweden when it comes to the smart contracts part of it, because it’s maybe one of the most efficient real estate markets in the world. Yes, it’s very straightforward, so it’s maybe not the market that needs most of the improvements in efficiency and speed. Not to say that you can’t make it even more efficient, but it’s a typical set-up from a Swedish point.
James: Improvements in efficiency. Yes, tell me about it.
Alright, what’s next for Datscha? Where are you going? What’s happening? Is it in another 19 years and it will be in France? (Laughter)
Magnus: Exactly. No, I mean, our focus for sure-
Eddie: That’s mean.
James: Was that harsh? You get my context.
Magnus: You’ll have to wait and see, man.
Eddie: Look, on behalf of James and I and everyone on the podcast, thank you very much for coming in today. I wish you all the best with that expansion plan, it sounds like it should be good fun.
James: I love that, ‘everyone on the podcast’, it’s like our big team of people.
Eddie: Yes, thank you team.
Eddie: (Laughter) James, what have you got for us on events this week? I know that we’re doing a thing on Thursday, which will actually be three days ago when anyone is listening to this, about VR/AR, which we’re feverishly preparing for.
James: You were very good at that, by the way, in three days’ time.
Eddie: Thank you. You were a superb compere.
James: Good. Well, that’s the VR and AR one, so that will be good.
I think that we probably should be talking about MIPIM, it’s coming up, 13th – 17th March.
Eddie: You’ve been getting very frisky and excited about MIPIM.
James: I have, I have.
Eddie: And bear in mind we’re sitting here with veteran, a MIPIM veteran of 16 years.
James: I know. I know. I’m going to go. I’ve decided I am definitely going to go.
Eddie: Now you’ve said it, you have to.
James: I have, I have. But you know what? Everyone is there, and I think if they have the right mentality about why they want to go, it’s a networking event, you’re going to see the who’s who of the property sector.
Magnus: Stay away from [Cafe Roma 0:36:08] though.
Eddie: [Shut up, now, come on], Magnus.
James: That’s because you’re going there.
Magnus: ___ true mistake.
James: (Laughter) But look, that’s where most people are. I think there is going to be a significant- I mean, it’s been a year of innovation, for crying out loud. It does make sense to be there. I’m working on a few things that will hopefully bring anybody who’s coming down there on the proptech side ___ together.
Eddie: Yes, there’s going to be a lot of stuff coming out in the next ten days or so I think about what’s involved at MIPIM for proptech businesses, founders, employees, whatever it is, I think it’s going to be a pretty inclusive event, and you shouldn’t hesitate to come just because you don’t plan to go to the show. There’s going to be stuff happening, and you’ll get value out of it, even if-
James: And you’re staying on a yacht, aren’t you? So we can all crash at Eddie’s yacht.
Eddie: You know, in fairness, after what I said about the beekeeping quote earlier, I think that’s one all. In my defence, it’s a 36-foot, not a yacht, a long way away, and I’m sharing it.
James: So everyone come and crash on his yacht, it will be good.
Eddie: You can come and crash on my yacht if you fit certain profiles.
James: I’m not even going to ask. (Laughter) But you know what, it will be good fun, and I think it’s worthwhile going. If you’re going in on the official MIPIM, or the unofficial MIPIM, I think it’s worth an attendance, and I certainly look forward to seeing anybody out there.
But there have been a few other little events, aside from the ones that we mentioned. Eddie, before we came on here, we started talking about the Urban Land Institute putting on an event, and I can’t find-
Eddie: Neither can I.
James: – one particular one. But there is-
Eddie: Have you got something?
James: Well no I have got one, which actually goes on while I think MIPIM is underway, so those of you who aren’t going to MIPIM, there’s a good one on March 16th which is talking about virtual cities, game engines and urban planning. I’ve seen a lot of quite cool tech around the gamification of planning in the UK. So that looks quite good, March 16th, it’s in London Aldgate Tower, looking at the connective and transformative potentials of cities are increasingly defined by cross-cutting infrastructure.
Eddie: You said that so fast. What?
James: They are looking at simulations, which are allowing better decision-making, and I think-
Eddie: ___[0:38:15] are not for profit I think, or membership body that the Urban Land Institute stands for, right? Something along those lines?
James: Yes, but that will be good.
Eddie: I know they’ve got a steering panel about proptech stuff. Right, what else have you got?
James: I think, to be fair, we’re going to have several podcasts over the course of the next month or so, so there will be a few more events coming out. But the one in the next three days I’m looking forward to, so it will be good.
Eddie: Yes, it should be good. I’ll see you there. Thank you very much, Magnus, James, speak to you next time.
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