Stop Hating on "PropTech"
But feel free to start hating "tech-enabled"
I’m confused.
Every few months there seems to be an online argument about the term “PropTech.”
People get all heated saying it’s a stupid term that doesn’t convey what we do around here. And that concept confuses me.
What we are we expecting that term to do? In what conversation is that term the final word?
Investor - “What do you invest in?”
VC - “PropTech”
Investor - (hangs up immediately)
or
Investor - “What do you invest in?”
VC - “PropTech”
Investor - “Where do I wire the money?”
In what scenario do you NOT have to explain what that term means immediately afterward?
You’re going to go into details about what exactly that means for you and your firm.
Or, if you are a startup and tell someone you’re in PropTech, you are going to have to explain what that means.
Friend - “What do you do?”
Founder - “I run a PropTech startup”
Investor - “Cool. See ya!”
Humans don’t talk like that. None of this ever happens. You are ALWAYS going to have to explain more.
And the exact same thing happens in other areas:
Investor - “What do you invest in?”
VC - “FinTech”
Investor - “Which areas?”
VC - “Embedding lending, NeoBanks, emerging markets, payment infrastructure, and mortgage technology.”
Do you see why I’m confused? What do we want this term to do that it isn’t doing?
PropTech is just a term that opens the door to further exploration. It’s not meant to be a final word or catch-all that answers all questions. It narrows the massive world of technology into a smaller subcategory that lets you explain why it’s huge/exciting/timely/etc.
That’s the job of the term PropTech. And FinTech. And BioTech. And MarTech.
They all do the same thing.
So why do we hate the term PropTech for not explaining perfectly what we do? It’s like being made at a tennis player for not being great at basketball. That’s not her job!
(Side note - my suspicion is that some of the ire that PropTech draws is from VCs who don’t want to be boxed into a single category in future funds. They assume that PropTech-only has a limit on how big a fund you can raise and those management fees on the $1B funds are awfully appealing. “We’ve always invested in real-world, physical environments in need of disruption.” You could make the same argument for startups that want to expand in the future into hospitality, infrastructure, or other adjacent categories.)
Leave PropTech alone. It’s fine and does its job.
Arguing about it is a waste of time unless you’ve come up with a better alternative.
If you must hate something, hate “tech enabled.” It’s nonsense.
First, what does “tech-enabled” even mean?
At the core, it means your business is enhanced/augmented/streamlined by technology.
OK, but whose isn’t?
If you have a computer, you are using technology. How many businesses have a computer? You are literally using the technology of Substack and your phone or computer to read these words right now.
Email is a technology. So is Excel.
So, by definition, any business that has a computer and uses email is a tech-enabled business.
Now, please understand why this term has proliferated recently - valuations.
“Compass isn’t just a brokerage shop. It’s a tech-enabled residential platform.”
“Bowery isn’t an appraisal firm. It’s a tech-enabled appraisal firm.”
“WeWork isn’t an office-space provider. It’s a tech-enabled work space platform.”
See the pattern?
All of these companies are essentially trying to convince investors and analysts not to value them like a traditional ___________ (brokerage, appraisal firm, coworking co, etc) and give them a premium because their tech stack is soooooo transformative.
It’s just marketing.
And while I have no real problems with marketing, I do think that a phrase like “tech-enabled” is simply a waste of time.
It doesn’t narrow the world down at all. Every firm in the world that has a website is tech-enabled. If you say, “We are a tech-enabled lender” I would retort “so is Wells Fargo . . . they use email.”
PropTech at least tells you that we are involved in technology that touches property. That’s a highly specific field and would indicate that we aren’t specialists in Biology, Medicine, or Education. Just buildings and construction.
Tech-enabled just tells me you have a computer and want a premium valuation. It’s like saying “We have humans on the team who breathe air.” So does everyone else.
Useless.
Just my two cents.
💯