Online agency fails to shine, once again
Some things in life are a raging certainty, Purplebricks and Purplebricks (2) burning huge amounts of cash, with a regular turnover of CEO’s, for example, with Sam Mitchell falling on his sword, having overseen ‘Strike’ pour over £73,000,000 down the drain, followed by a year of the New Purplebricks replicating this trend. The biggest question for me – if year after year Strike (great name by the way I wonder what genius thought of that) loses multi-millions, why would you not eject the CEO sooner? We see this trend time after time in the estate agency world, YOPA also has a sterling performance in burning cash, also it has pivoted its model so many times that it would have been better to have closed the doors half a decade ago and just set up a franchise business instead.
The big thing I never understood with Purplebricks (2) is that when it was acquired for a £1, a deal that looks very expensive now, its CEO Sam Mitchell had two choices, continue with the cash generative business model of the Bruce Brothers, where every instruction was around £1,000 in the bank sale or no-sale, OR adopt the kamikaze Strike model of offering a free sale to vendors, hoping that the income streams from residual business would get you to profit. And of course in its first year of trading which ended four months ago, Mr Mitchell decided the freemium model was a great idea, after all who would not want to sell for free?
But of course to run an agency is expensive and that is why to balance the books over 100 bright eyed Purplebricks (2) people ‘left the business’ after its first year of trading much like Mr Mitchell.
It is not all bad though, apparently they won an award recently, which again perhaps opens that particular pandora’s box, who dreams up the worthiness of ‘winners’ for these industry awards? Agencies who are quietly making multi-million pound profits on a regular basis, or those who enjoy the limelight – often for all the wrong reasons. A discussion for another time!
In three or so hours we will know if the Bank of England will raise, lower or keep the base rate the same, even if there is a 25 point reduction, borrowing for mortgages will continue to be expensive for the immediate future, factor in the SDLT rises for all in April 2025, the lowering of relief for FTB’s and the continued fiscal and regulatory pounding of landlords, we may well see a very different picture emerging as the ‘sell off’ of lettings assets slows, which at present is propping up an otherwise sluggish mid and upper market.
Andrew Stanton Founder & Editor of 'PROPTECH-X' where his insights, connections, analysis and commentary on proptech and real estate are based on writing 1.3M words annually. Plus meeting 1,000 Proptech founders, critiquing 400 decks and having had 130 clients as CEO of 'PROPTECH-PR', a consultancy for Proptech founders seeking growth and exit strategies. He also acts as an advisory for major global real estate companies on sales, acquisitions, market positioning & operations. With 100K followers & readers, he is the 'Proptech Realestate Influencer.'
