He also talks about how listening to the market helped to form their solutions, ensuring that Yourkeys remained focused and that their product was always benefitting the customer.
- It would be great if you could give the audience a bit of background about yourself and the business.
I’m originally an architect; I did the full seven-year process and went to work for the biggest design firm in the world, Gensler. I did some incredible projects with Facebook’s offices and Shanghai Tower, all sorts of interesting architectural projects. After three or four years of doing that, I found myself getting really interested in how people live and ended up going more into design around the urban environment and residential development.
That led me down a path where I was engaging with many housebuilders and eventually got persuaded to move across to the dark side and go and work for one of them! This was initially around design and the initial user experience, and how buyers engage with the sales process. We were part of a team that were due to deliver a couple of thousand transactions of property sales (new builds) over the coming three years, and we were one day sitting around a board table and were looking to scale up the team.
For a reason unbeknownst to me, even to this day, I put up my hand and said ‘I’ll take on Sales’. Not exactly sure why I did that, but what that did lead me down the road of is really getting to understand the fractured and fragmented nature of the property sales process in this country. There are lots of people involved, it’s jargon-filled, it’s very analogue, lots of paperwork and lots of inefficiencies in the process. So, after trying to understand this over a couple of years, that was the genesis of creating Yourkeys – which is our company now.
Yourkeys is split into two parts, The first is what we call the ‘reservation engine’. Typically, when you walk into a marketing suite or an estate agency and reserve a property, you’ll get a very basic reservation form, you’ll sign it and they scan it. They’ll send it out to various stakeholders in the process, then they in isolation will process things like anti-money laundering, making sure you are who you say you are, all of the form filling, you’ll have to do your application directly to the lender, engage with your solicitor and conveyancer all separately. And as a result, as a process from reservation to exchange of contracts, which is a key milestone in that process, that takes about six weeks on average.
It’s incredibly slow and we don’t believe that should be the case, therefore the Yourkeys reservation engine automates all that data gathering, all of that onboarding, so that information can be passed down the supply chain. What we find is, by collecting all that information up front in a really streamlined way, that process is reduced from 63 days (on average) down to less than 21 days. It’s a huge efficiency.
The second part of what we do is that we built a set of bespoke APIs integrations into many of the major lenders, conveyancing organisations and mortgage brokers across the country so that everyone can be closer to that transaction in a purely digital way. It gives everyone oversight and transparency in what’s going on and inherently makes the process slicker. At the moment we spent all of 2019 in Beta and we launched the full version of the product in January. Now we have some of the country’s major estate agents and housebuilders using our product to make their processes slicker. We’ve got about 25,000 property transactions in the pipeline and are growing month on month. We are definitely getting there, by no means finished, but getting there at speed – and it’s a really exciting place to go.
- And who’s your main client – is it the housebuilders, is it the estate agents? Who’s buying your platform?
It’s the seller. None of the secondary people in the ecosystem, (which is the conveyancers, the brokers, the lenders and the buyers) pay anything for access to the benefits. So we charge the seller – whoever is in charge of selling that plot. It can be the agent and it can be the house builder. They pay a license fee and a transaction fee on the way through to us. Typically we’ll go and pitch to a house builder and they will onboard all of their developments from across the country.
- Tell me about the first idea you had as well as to what’s come through now because I think it’s a really good lesson to share…
I think your initial idea when you start out on this journey compared to where you’ll end up, you would have got about 80% of your first assumptions incorrect. That’s totally normal. The good thing about having a lean tech-focused energetic company right from the start is that you can be agile. What they often say about an MVP is that if you launch it when it’s ready, you’ve launched it too late. That is a testament to this idea that you need to put it out there and get feedback. The amount of information you can access by giving the idea to someone else who’s never seen it before is something that shouldn’t be overlooked.
When it comes to what we did, our initial idea was understanding there are four or five stakeholders in this transaction and none of them are talking to each other – they are all doing duplicates of tasks. For example, we asked a few of our buyers and we found out from their current processes, just with the ID checks, they were being asked seven times for this on average – really inefficient! These new online banks that have started, such as Monzo & Starling, allow you to take a photo of your face, send it off, and then have access to thousands of pounds worth of credit – what a fantastic user experience and why can’t property be like that? That is our objective.
We thought of developing individual dashboards for all of the stakeholders, so when one of them gets updated you can see exactly what’s going on across the board. And in principle, that works. However in practice, when you go out to all these stakeholders and sell these dashboards, everyone has dashboard fatigue. No one wants another third party system, a separate system that they’ve got to update, so it gets forgotten. After four or five weeks of everyone going ‘This is great’ and you can see what’s going on, to then the updates that are supposed to go out to the stakeholders start to happen outside the system and the system falls behind. That is not what it set out to do and we learned that the hard way!
Instead, we needed to make this process a lot more efficient whilst not changing what anyone in the process does day to day, using technology to create the efficiencies between the nodes in the ecosystem. So that’s what we did! We know that housebuilders and estate agents are spending a couple of hours every time pulling together all the upfront information. We needed to create a system that aggregates that automatically and does it in a tenth of the time – a 10x rule. Then, the integrations into the existing systems for everyone else in the ecosystem needs to be exactly that – a seamless integration where they can pick up a software development kit, integrate into their own workflow in a matter of a couple of days and all of that data flows through seamlessly with changing what they do normally. That was the approach that we launched in January and it’s been scaling successfully since then. Don’t be afraid to make the mistake even if you’re not 100% sure that the solution is the right one – go for it as there’s one thing for sure, the market will tell you if you’re wrong!
- That’s a really good lesson – especially in this environment – the market will tell you if they like it or not! Is there an underlying problem around property developers and the agents that you’re solving with unsold property? I.e. the time that it takes and the capital risk that they have in this process?
You’re exactly right. If you think about the market as a whole, there are around 250,000 new build transactions every year on average over the last decade and about 1.2 million transactions in total across the resell market as well. Across both those sectors, there’s an average fall through rate of just shy of 40% which is incredible. The amount of lost time, effort, energy, fees – it’s about £2500 for every buyer in the process and hell of a lot more for the actual agents and housebuilders that are reliant on that cash flow in order to open up the funding and cash flow to build subsequent places. The fall through rate in the sector has a huge impact on how much we can deliver in terms of house building and net additional homes per year. There are lots of interesting stats and, as a sector, sometimes we ignore facts and make excuses. About 15% of those fall throughs is down to what we call the ‘six week period’ – you’ll see a huge spike in the number of fall throughs that go beyond taking six weeks from reservation to exchange of contracts. That just comes down to people getting insecure in the process, lack of communication, they might find somewhere else, they change their minds, their circumstances change, etc. So if you can shorten that period, your fall through rate shortens, cash flow comes in the bank quicker, you’re spending less on marketing. The impact exponentially across the market is huge when you look across the market of over a million transactions. That is where we see a big benefit by making transactions more seamless.
- At a macro level, in terms of the economic climate that we currently have, how is that affecting the property sector and what are your thoughts in the future?
It’s an interesting time – we all watched previously as politicians answered questions every day about where we are going with COVID-19 and what the exit strategy is, and I always think that they’re afraid to say ‘I don’t know’ even though that is the reality. I’ll want to take that route a little bit too as we don’t know what’s going to happen in terms of demand etc. We are already starting to see housebuilders get back on site, which is a positive thing so we are expecting the sales process to start to come online. In terms of demand for our project, because of the ability to take reservations entirely digitally from anyone across the world, without them being face to face, there is a demand there and we hope to offer the solution to help re energise some of those transactions where they normally wouldn’t be able to be conducted.
But on a macro level, in terms of the MHCLG (Ministry of Housing, Communities and Local Government) and Homes England, they are authorising transactions on unoccupied homes. That lends itself well to the new build sector as there are problems around people moving out and transmitting on second-hand homes, so we’re hoping the new build sector will come out of that quickly as it’s unoccupied. In terms of transaction volumes, they’ve probably taken about a 75-80% tumble in comparison to these months last year. So although stock is low, you start to look at the social impact of this. If you’re cooped up in a one-bedroom flat in London – where’s the place that you’re looking for as your next move… somewhere rural, somewhere bigger with a garden? Divorce rates are projected to increase. Overall, demand will increase. I will expect the new build sector to take off at a more rapid rate than the resell market.
- What advice would you give to others that might have seen a tumble in their market sector over this period?
Conserving cash flow is an easy obvious one, to begin with.
Secondly, cut all of your excesses and try to become as lean as possible. Sometimes as founders, we can get very excited by other opportunities that are out there – we’ve got a really good advisory and team and this has allowed us to really focus on the narrow rather than the wide. What is the core problem that you are solving and double down on that problem. In terms of strategy, if you think about where you want to get to at the end of this and where your benefit lies for your clients, put all of that in a frame and use that as your sieve for making everyday decisions. If something lies outside that frame, it’s excess.
Thirdly, I would not be too defensive. There are a few firms out there that you see on social media, for example, that are very defensive. Actually prioritise and focus on one part of the business that provides value. If you’re very lucky, how do you make the best of a crisis? How can you reach out to your clients and be a helping hand at this point? For us, one of the first things we did was to put out a six-month offer of using our platform completely free, as we knew housebuilders were suffering so we wanted to help. If there’s a part of your business that can be adapted to help your clients and be beside them throughout this crisis, then absolutely double down on that. Go on the attack, don’t be too defensive – there’s always opportunity out there.
Also, the crisis has given us the ability to talk to senior people within companies much quicker than before. For us in property, if you can offer them a solution, the ability to go from a LinkedIn message to a meeting has rapidly increased. It’s gone from a five-step process to a one or two-step process, meaning there’s an opportunity for an elevator pitch within a matter of days. The decision-making process has been accelerated massively. The lead number might have decreased, but the quality of conversions is much higher, so when volume picks up, you’ll be in a great position.
- Any final words that you would like to pass over to anyone reading this interview?
I always say, as a tech company, we are nothing but a bunch of binary code if it wasn’t for our people. So the biggest thing for me, and what has been a massive key focus over the last few months, is making sure morale is high, making sure our team is happy, making sure they’re engaged and part of something bigger. Giving people the time they need. As with the last few months, don’t forget your people, your company is nothing without them so make sure they get the time and effort they deserve.
- Where can people find out about you and learn more?
Thanks Riccardo, really appreciate the time to chat!
We want to thank Riccardo for this interview, a really useful discussion around leverage feedback from the market to guide the decision-making process at a startup.
That is all from us at Sales for Startups today, be sure to tune in soon for more interviews with CEOs and Founders of some great companies that are shedding some light on the current issues we are facing. If you’d like to be interviewed please comment below or feel free to connect with me on LinkedIn or submit a request on our website.