Michael Bruce knew his industry was antiquated.
Bruce, the CEO of a traditional real estate company in the U.K., saw that exactly no one was happy with the home-selling process. The traditional model meant that home-sellers paid 6 percent to agents who maintained complete control over a slow listing/selling process.
Bloated real estate storefronts went largely unused by agents, never used by customers, with the expense being passed through to the seller. The seller also experienced less than full transparency, agonizing waits at multiple stages of the process, and a general lack of control over what remained one of the most stressful life experiences in existence.
Meanwhile, other industries were using technology to advance or even revolutionize the consumer experience. Michael and his brother Kenny wondered, was it time to Uberize this tired industry?
Yes, and four years later, Purplebricks has catapulted to $200 million in sales, is the number one home selling company in the U.K. and the number three in Australia, and has now landed in seven U.S. states, where conversion rate of interested sellers to actual listings is the highest of any country.
The model is decidedly disruptive. Sellers visit thewebsite and enlist a highly skilled real estate agent who will get a flat fee (nowhere near the typical 6 percent commission) and have the house on the market within an hour of being contacted. The sellers get much more control over the process and can arrange their own showings, get immediate feedback (including finding out instantly if they’ve made a sale), and communicate directly with potential buyers–all things that largely remove the “middle-man” agent.
So what does the agent get out of it? They’re given leads, lots of them, collected via the company’s website. This means 85 percent of the agent’s time is freed up to provide better service to more customers than they otherwise would have gotten (further boosted by territory exclusivity they’re granted). So despite receiving only a flat fee, agents make more money in the end. An “everyone wins” disruption.
But Bruce didn’t always feel like he was winning. The founder and CEO told me of his struggles to raise money. He believes the gates of funding opened only after he’d gone all-in and invested everything he had. Investors liked what he invested in, but liked even more the fact that he had invested so much of his own money and clearly had far more to lose than they did. That told investors no one would work harder than Bruce to make the idea work.
Bruce also had to make a sizable leap of faith as he initially built the Purplebricks platform. He’s not a technologist, so he had to nervously wait over a year for people with specific knowledge to deliver a technology he hoped would provide the experience he wanted home-sellers to have.
The founder also wondered if he’d ever be able to get the best real estate agents, the kind who shared the values of Purplebricks to provide great service and big savings for the seller, and who wanted to be part of a disruption.
Bruce worked through all these challenges, driven by the fact he knew he had a disruption that would lead to a better experience in something that mattered.
So how can you do the same? The CEO shared these three principles for any entrepreneur who wants to find an industry to reimagine.
1. Find friction.
Disruptions happen when real problems with real pain points are solved with real solutions. It may sound obvious, but far too many entrepreneurs fail to first consider the pressing need they’re filling. They spend time creating the market for the solution they have, rather than creating a solution for an existing problem in the market. And you understand the depth and breadth of the problem to be solved when you follow the second principle.
2. Get close to the people that have the problem.
Bruce said he spent two years deeply understanding everything people liked and hated about the home-selling process. That included all stakeholders affected, including sellers, buyers, and agents. The deep understanding even led to an advertising idea–commercials that touted Purplebricks as solving “commisery,” the misery for everyone involved that comes with paying a high commission.
3. Look for laggards.
A telltale sign of an industry ripe for disruption is if the category is technologically lagging advances seen in other categories. The ride-hailing industry was transformed by Uber technology, as Airbnb did for rental properties, and now Purplebricks for home-selling.
Can you find an industry that has been operating the same way for far too long, unaided by technology that could deliver a far better experience? If so, and if one and two apply, you may have found your market to reimagine.