Property AI Report 001 - Purplebricks, Yopa, Musk & CoStar

AI and PropTech Shifts: Layoffs, Acquisitions & Futuristic Innovations

Welcome to the Property AI Report! In this first episode, we explore significant developments in the property and AI technology sectors, including Purplebricks' layoff of 100 employees and Yopa's stable profitability. We examine REA Group's rejected offers to acquire Rightmove, CoStar's acquisition of the UK's OnTheMarket, and insights from the PropTech and Portal Watch conference in Barcelona with industry leaders Andy Florance and Simon Baker. Additionally, we delve into Elon Musk's newest technological innovations, OpenAI's remarkable fundraising and your essential estate agency AI Tool of the Week. Lastly, we preview the upcoming ESTAs event. Tune in for comprehensive insights into how these trends could shape the future of your business.

00:00 Welcome to the Property AI Report
01:24 Purplebricks: A Deep Dive into Recent Layoffs
05:55 Yopa's Profitable Strategy
07:56 PropTech News: Rightmove and REA Group
10:20 OnTheMarket's Push with CoStar
12:17 CoStar's Reluctance to Acquire Rightmove
13:59 Zoopla's Position in the Market
14:52 Elon Musk's WeRobot Event Highlights
17:48 OpenAI's Roller Coaster Journey
20:08 AI Tool of the Week
22:01 Upcoming ESTAs Event

Chapters

• 1:30 Property Market News
• 8:53 PropTech News
• 16:52 Technology News
• 20:06 AI News
• 22:44 AI Tool of the Week
• 24:49 Coming Up This Week

Transcript

  Hi everybody and welcome to the Property AI Report. This is the first episode of a weekly podcast where we will look at property and AI technology and how it all fits together and how it can help you, your businesses to really move forward, to win more market share, to win increased revenue per transaction and to help with productivity and to help you cut your costs.

So we're going to have Literally 20, 25 minutes worth of content here and it's going to be focused around Property news and prop tech news. All right, so we're going to do a session about things like Purplebricks and their layoffs this week. We've got some stats about on the market that dropped this morning.

We're also going to be looking at technology and AI. Elon Musk had an event last week where he was rolling out his robo van had some updates on some robotics and stuff as well. So we'll catch up on that. And then also things about open AI in the AI section. How they're losing even more of their their kind of founding team and but at the same time, they are raising 6.

5 billion. Lots going on there too. We'll have our AI tool of the week. So something that you can use right now that is going to help you in your business. And then we'll take a quick look at what's coming up. Let's dive in first of all and start with property news. 

In this week's property news, the biggest section is going to be all about  bricks. Now last week they announced that they were going to have to shed 100 of their team members. Now anybody who knows anything about Purplebricks will not find this much of a surprise. So if we head back probably about 10, 12 years this was a business that claimed it could do quality estate agency for a few hundred quid.

Now they, I think over time, raised about 243 million and they used this money to essentially subsidise that service. So actually,  rather than only costing a few hundred quid, they had to backfill it with some investor cash. They also spent a lot of time and money slagging off the rest of the industry and basically telling vendors and landlords that the local high street agents were ripping them off. 

So that caused a lot of problems within the industry, particularly around having to agents not being able to charge a fees came down to less than 1%. Now I know that in general, not many tears are shed for the property community estate agents in particular. However, what I would say, and having worked in the industry for 25 odd years that by far the majority of estate agents are great at what they do and really care.

So what  This did was it tarnished the reputation of sways of the country professionals. It tried to make a quick buck for the founders, the Bruce brothers and and their and people around at that time when they floated. Obviously they went off into the sunset eventually with all the money.

And in the end, Purplebricks was sold in the last 18 months for £1.  Okay, so all that money, all that effort, all of that hard work. And, a lot of people really got involved. And it just disappeared. And the reason was because it's not possible. to provide quality estate agency for the price they were charging.

And, those subsidies in the end were always going to run out. Investors are going to want a business that makes money, not one that just constantly goes back to them asking for more. So that's what happened in the end. But that pound was spent by a company called Strike. And these were the ones that essentially acquired the brand of Purplebricks. 

And indeed a bunch of people that worked for them as well, 100 of which appear to be losing their jobs right now.  So Strike's model is the  same, although depressingly worse. Essentially what it does is it says, come and sell your property with us for free. So Purplebricks is now free, and I'm using air quotes here with  also exclamation marks. 

Because  It's not really free. You've got to try and they will try and make their money by sell upselling you on conveyancing or solicitors, which obviously has to have a higher margin within it in order for them to make any money at all. It doesn't seem like they are, however, successful at doing this.

And that is no surprise because selling houses is is difficult. And also there's a lot riding on it. Now, that Purplebricks was able to convince people that they could save, and I'm again, air quotes, save 3000 pounds by using them, but then to get them to overlook the fact that they probably just missed out on. 

The price of that property being 000 pounds more, right? So you save three grand, you lose 10, 20 grand on the actual price of the property itself. That's the crazy bit. And that's the bit that it was very difficult for other ages to articulate clearly enough. We've got new Purplebricks that is laying off a hundred people.

It's trying to convince vendors that it can do what costs, on average three and a half to four thousand pounds for free. And that essentially they're going to get the same level of service. And that just is, even those for whom Purplebricks Who were charging a few hundred pounds might have been worth a punt.

I think that this free idea is gotta be really dubious. And I think that the fact that they've been so invisible over recent months.  Suggests to me that the that is not working and I would not be surprised if they were Purplebricks were once again going to have to go through that being flogged for a pound slash going bust type situation, which for many people is always sad people involved, etc.

But at the same time, if you're. marketing campaign is basically slating some really good people trying to do a great job, then there's going to be very little sympathy for you in the end, I think. So that's Purplebricks. Obviously, we'll be watching this space, we'll be keeping up to date with with what's happening as we go along.

As it goes through. But several. Yes, it's interesting to compare them actually with the Yopa,  which is another they also have a fixed fee and a very cheap kind of fee. But what they don't do is they don't use  it as a means of saying that you're being ripped off elsewhere. They say, look, we just cheap.

We will do. This much for you. And there's a market that, there are people for whom selling their property for the least money possible is an ambition. And I think, particularly on the leadership of Verona Frankish Yopa have become profitable. They've become a lot more profitable.

More kind of just open and that they've recently in the last week, they've announced that what they're doing now is doing a self employed model so they can actually recruit people to do self employed. The Yopa branded estate agency in their communities is a very crowded market. There's loads of others doing it out there.

Including some great traditional estate agents for all of a better phrase. People like Preston Baker missions down on the South coast.  So there's lots going on here. But what I, I think that the contrast between those two businesses that, that didn't start a million miles apart in terms of timeframe is the, one of them is  basically continued to try and denigrate the industry in which it works.

And it's now falling off the cliff again that's Purplebricks. And then the other one is Very much more of a kind of right, this is who we are playing alongside. The other options for vendors in the market. But, it's got its own kind of identity and seems to be doing, yeah, doing well, into profit now.

I think that to me,  epitomizes what good businesses should be, which is, essentially knowing who they are, actually delivering on their promises, which is cheap  and enabling  profitable business to happen  without necessarily actually going into  other businesses and having to slag them off as well.

So yeah, really interesting contrast. And we will be back to, I'm sure, those two businesses. Now let's talk a little bit about PropTech news. 

So in PropTech what is standout this week is a lot more portal news. Now our friends at Rightmove a week and a bit ago decided that they weren't going to sell themselves to the REA group. Over in Australia. Quick recap REA group at the beginning of September were forced really to announce by the disclosure committee, which sounds super sinister that they, that there were rumors of them approaching Rightmove and they were affecting the share prices.

So they had to come clean about whether they were going to or not. So they said, yeah, we're looking at this. So they hadn't even spoken to Rightmove at this point. So then what happened was that Rightmove rejected their first offer and then REA Group came up with a further three offers and then by the 30th of September they had to put up or shut up and they decided actually we're not gonna, we're not gonna increase our our fees, sorry our price.

This was really quite quite a surprising move at the start, that Rightmove was worth 4. 4 billion pounds at that point. The shares, the final offer was 6. 4 billion, but that was including shares in, in REA Group. I do think that if they had come with all cash, then the shareholders of Rightmove and perhaps the board would have recommended it.

But because part of it was in REA Group shares, which seem to be a little bit overpriced as it stood right now, then that's probably why that folded  and why it wasn't accepted at the time.  REA Group I don't think really had time to get their strategy together  before they were forced by the Disclosure Committee to reveal that they were looking at right move. 

And that's why I just a bit flubbed out towards the end, really. But what that means is that That essentially, movies is on the slab, right? People are now looking at it rather than it being this sort of all powerful beast. It's actually, somebody might think about acquiring it.

So there were all eyes on Andy Florence of CoStar at the PropTech and Portal watch conference in Barcelona a week and a bit ago which I was lucky enough to be part of and presenting at and Andy Florence was in conversation with Simon Baker, who's the.  the founder of of PropTech and Portal Watch also ex REA group.

So he actually built the REA group up from from essentially a garage project from a couple of developers into a Rupert Murdoch majority owned business. And so the conversation between the two of them was awesome.  And essentially, Andy Florence said he wished more than anything else that the REA group had acquired Rightmove because that would make his job a lot easier.

Now, again, just to recap, Andy Florence, co star, recently acquired the number three portal in the UK, which is called on the market. And that acquisition also got a big old pump prime this morning when on the market released astonishing amounts of data with very high numbers, saying how awesome they are.

And which, which may very well be true. But one of the things that is also true is that estate agents that I speak to on a day to day basis don't necessarily feel that has significantly impacted the quality and volume of leads they're getting on a day to day basis from on the market. But that aside on the market are clearly pushing really hard with CoStar and Andy Florence's backing to make this PR pitch that they are the coming force, that they are growing and that everybody needs to pay attention to them.

I think there was a 47 percent uplift in properties that got advertised compared with this time last year 27%, 25 percent uplift in the number of agents. So some solid numbers. And they also claim they've spent this 46 million pounds that they had started the year with on search engine marketing and through Google, et cetera.

That's a lot of activity. It's not money. spent, right? But actually for relatively little relatively little love, I think is probably the phrase from estate agents for those efforts. So that would probably be a bit disappointing internally, I'd imagine, but no doubt there will be more and more to come with a slightly different strategy.

And also it is said and indeed Andy Florence let this slip. During the conference during when he was talking with Simon that that he was imagining that the homes. com Manchester stadium was what he described it as. I think it was all about Manchester United. So  that does seem to be a rebrand coming up on the market to homes.

com, which would be which would be huge. But sensible, again, we've been talking about it on the blogs here at model prop since since March that it looked very much like homes. com for slash UK would be the sensible way of going about it. There's been some that brand is very prominent in their in their offices here in London above the, on the market in tiny letters.

But anyway so when Andy and Simon were talking up on stage a week and a bit ago in Barcelona, there was a lot about are you going to buy,  right? There's the CoStar is a three, 33 billion business. So I'm not suggesting that, 8. 2 million dollars, which is the conversion rate is chump change, but he could probably afford it.

But he was absolutely adamant this was a business that he would never want to acquire. He said the 70 percent margin is absolutely obscene, that Rightmove makes on all of its all of its revenue. And that he would see that as a kind of ball and chain dragging the business back because he would have to service that shareholder base and their expectations are that this margin must continue.

So it was really interesting that first of all, he absolutely viewed right movers actually suffering or will suffer as a result of this kind of need of its shareholders, and perhaps particularly now that they have rejected a sizable premium for their shares and trusted the current board to, to do better and to keep their share price up.

So yeah, he he's definitely got his eyes on eyes on the prize and he's going to do everything he possibly can. To get ahead of right move to the point that he was talking about spending half a billion  pounds on marketing rather than shipping  any number of billions to the right move shareholders to buy the number one spot.

Always going to be lots and lots on these guys. I think that they are it's getting really interesting. I think that that Zoopla are being squeezed in the middle obviously. And I think that's going to be interesting how that plays out. There are rumors this week that that there's changes at the top of Zoopla.

And I wonder whether that plays out. does presage a potential co star Zoopla tie up. I really wouldn't be surprised about that because I think that the more money they spend on fighting each other, the less they've got to go after right move with. So yeah, going to be exciting. I think end of this year, early next year to see how that all shapes down.

But I would expect a homes. com combined fight. with Zoopla and and on the market underneath them that would actually start to give Rightmove a little bit of a run for its money. So we will keep keep up to date with all of that. So that's the PropTech news. And next we want to have a little look at technology news in general. 

So in technology news this week we've got Elon Musk. Now he had his WeRobot event last week which revealed the RoboVan and the CyberCAD also some updates to his Optimus humanoid robot. So the last thing was probably the most exciting in that he was talking about all of us having our own robot and possibly robots and each of them costing between twenty and thirty thousand pounds or dollars, sorry.

Yeah, essentially this, he believes in the next few years is going to start to become pretty mainstream. Now, he has been very wrong  very often before in terms of his timings and, it's almost, I think it's it's quite comedic. Just how he was talking about. We'd have full autonomous driving, I think in 2021, which you know, driverless stuff, and that's we're seeing not here yet.

In 2024, but yeah, so But if you looked at the humanoid robots now it has been said since. That they were all actually being remote controlled rather than walking along on their own autonomously, which wouldn't be a surprise obviously, but they look pretty good. Really good. If they do get into max sorry, mass production, then that's going to be something that's going to be huge, I think.

And there's a number of other competitors out there doing the same things to companies like One X. And doing some really cool stuff with and getting these humanoid robots into the home so they could start to learn. So there's a huge amount going on in that space.

And I do see it as being a really huge part of our futures in the next sort of five to 10 years, particularly. He also unveiled the cyber cab which everybody got very excited about. Particularly, I think the butterfly doors that open but yes, essentially this doesn't have a steering wheel or a or any pedals and it just, you get in it, it drives, it stops, you get out of it and it looks very cool.

So that's worth having a look and we'll put we'll put the the link to some of the videos for this in the show notes. But also he unveiled a robo van, which was a surprise. Nobody was really expecting that. And this was again, very futuristic looking a little bit art deco. All of these.

Three things actually that there's been a kind of a bit of feedback on the socials about how this looks very much like the iRobot film starring Will Smith from 2004 20 years ago. And actually there's some pictures again we'll put the links in the notes that do show that actually he essentially just seems to be watching that film a lot for the last 20 odd years and he's just basically we'll just do that. 

But yes, it's still. Pretty cool robo van. Basically you get into it, then all the seats spin around, you can just watch a film while you're, while it's driving or, do whatever you like. But it is it's very it's very advanced and, again, these things are going to come.

They will probably be a lot longer than Mr. Musk has said,  but yeah, I'm certain that in the next sort of five years or so, we'll be seeing some of those out on the roads. Even over here in the UK. All right, next up some AI news. 

So one of the big names in AI is of course OpenAI, run by Sam Altman. Now it has had the rather inconvenient habit of losing its founders over time. Elon Musk, who we were just talking about is one of them that has that has fallen by the wayside. And of the original 20 members of the team, apparently there's only six left including Altman himself who famously was actually fired about a year ago for not being straight with the board.

Then all of the investors got together and indeed the staff and went, we want him back. Otherwise the staff said we're all resigning. So he was then fired.  So it's been a crazy kind of soap opera in that business, but it's still absolutely gutting, right? It raised 6. 4 billion, right? The highest raise ever last week from multiple investors.

And it's going to turn itself into a for profit. It has historically been a not for profit. And yeah, it's just going to, it's just going to continue delivering things. So it's products are things like ChatGPT. All right. They released ChatGPT almost two years ago to the wider world and everyone went crazy.

And it was right about that time that we started here at ModelProp looking at What we could do with AI in the property space and mapping some really cool products into property advertising. So yeah, it's been a real kind of a real roller coaster for this business. And yet, it has raised the largest amount ever for a private company.

So yeah, plenty more to come from them, I'm sure, over the coming weeks and months. Things that we are looking forward to include Sora, which is their text to video. AI, which has been delayed quite a long time now and others have been catching up, big people like Runway and and Luma. But yes, it's so that's, that should be coming out soon and everybody's waiting for ChatGPT 5 as well, which which they think should be coming relatively soon.

It's released ChatGPT 01 and It's also released for O. So there's a few different models coming out and about, but yes, there's plenty more. I know they've got a lot of money to do a lot week.  All right. So that's your new sections. We talk property, we talk prop tech, we've gone through technology and AI. 

Now we're going to get to our AI tool of the week. 

So this week's AI tool of the week is Notebook LM from Google. So if you go to  notebooklm. google. com there is essentially a place where you can upload anything, right? A link, you can upload a document, you can upload the Renters Reform Act text, whatever you like. And then you can just start asking questions about it.

All right, it's really cool. And you can it will delve deep into any particular areas that you're looking for. It'll summarize it, it'll ask, you can ask it for controversial elements of it and so on. But what's even cooler is you can then actually click on an audio overview  and it will give you two AIs  having a very natural sounding conversation about whatever you've uploaded.

All  right. So it's really interesting. So it will be like a 10 minute summary of whatever it is in a really easy to digest way. So one of the things that we've been messing about with here is putting links to property descriptions in there. So if you've got, a property on your website and say, you've got some weekend team going to, to a viewing appointment with a particular potential buyer, maybe they're not as familiar with the property as the person that's taken it on.

So what you can do is you can just put a link and this is all free, by the way, just put a link to that property into notebook LM and get it to generate this audio overview. And then your weekend member of staff can listen to it while they go to the property. And then there'll be so knowledgeable about this particular property.

I think it's really cool, really fun have a look at it, but it will certainly help you. I think. Even if it's just internally with, churning through so much documentation and so many bits of information. And it's, it will just help you to synthesize and summarize and understand things a heck of a lot quicker. 

So that's Notebook LM from Google. It's really good.  So there we have it. That's the Property AI report for this week. Thanks so much for listening in. Just one more thing before we go. This Friday is the Estes. Now, if you're not going or you've never been before, Honestly, it's amazing and you really should.

It is one of those events that is, is very unique because it happens in the afternoon. You do find yourself blinking out into the light at about six o'clock in the evening, rush hour Friday. And yeah, just really not quite knowing where the hell you are. But it is great fun. There's so many great people there.

So many awards for quality achievements right across the board. We are honored to be guests of the Depository Christian and Carla and Co. Amazing business and really super guys too. So very much looking forward to that. If we're going to see anybody there as well, super excited do come over and say hi.

But yes that's this Friday. We will no doubt be talking about it next Monday when we will have the second of the property AI report podcasts. Until then, thanks very much indeed for listening. I'm Mal McCallion and I'll see you next week. Cheers. Bye bye.