TRANSCRIPT: ProptechBNE – Isaac Coonan: 2023 Australian Proptech Economic Impact Report

Kylie Davis:

Welcome to the Proptech podcast. It's Kylie Davis here and I'm delighted to be your host as we explore the brave new world where technology and real estate collide. It's so great to have you here and to share stories of innovation and opportunity across real estate, property and building services. And the aim of each episode is to introduce listeners to a Proptech innovator who is pushing the boundaries of what's possible across how we design, build, buy, sell, rent and invest in property and all of the associated behaviour and activities around that. Now, none of this would be possible without our sponsors, so a big shout out to the Direct Connect team, making moving, easy, dynamic methods, the innovators behind the forms, live and RealWorks forms, and the Proptech Association of Australia. Thank you for your support of the podcast. My guest in this episode is the fabulous Isaac, coonan founder and head of Proptech Brisbane, or Proptech B E, which specialises in promoting the value of proptech to Southeast Queensland.

Kylie Davis:

Now, Isaac and his team have recently released the Australian Proptech Economic Impact Report, a landmark document that is now in its third year that captures the data about the Proptech ecosystem across Australia and analyses the contribution it makes to our economy. Now, the Proptech Association of Australia and I personally have been very proud to collaborate with Proptech Brisbane on this great initiative. And this year we delivered the first Proptech Map as part of the report. So this episode is a little bit different to a typical podcast because Isaac and I can, as Isaac points out, talk under wet concrete together. So we discuss the findings of the report and the trends and the current behaviors of the Australian Proptech ecosystem.

Kylie Davis:

Here to tell us all about it, Isaac Coonan and welcome to the Proptech Podcast.

Isaac Coonan:

Thank you very much, as always. Thank you for having me.

Kylie Davis:

It's great to have you back on the show. Now we're going to talk today about the Australian Proptech Economic Impact report. It's third year that we've been out for. Yep. But it's changed its name slightly. Give us a little bit of background.

Isaac Coonan:

Yeah, look, third year going, I think, for us, we made the strategic decision to change the name at the beginning of actually, at the end of last year. I beg your pardon? After we had our final board meeting for the year, and it was actually in consultation, even with people like yourself, Kylie, where we kind of said, well, what is the report? You know, it used to be called the Australian prep tech map? It was the name we decided because we wanted to create a holistic overview of the economic outputs of the growing Proptech economy. And why that's important is people like government who create policy or frameworks that support emerging tech ecosystems, they need to understand, well, what does the economic output look like for this technology cluster? So we knew what it was doing but I think the name was confusing people. They're expecting to see a bright, shiny pretty map and that's not what this report was doing.

Isaac Coonan:

So went the process to rename it to the Australian Proptech Economic Impact Report to just align more clearly with what it is we are actually delivering and we've had some great feedback to the rename and the restructure of it so far. So we're happy with that decision.

Kylie Davis:

Yeah. Awesome. And so the Proptech Association then took the name Proptech Industry Map, and we created our first version of the proptech map. And we used your report as our deadline, because there's nothing like a deadline to get stuff done right by. And we're about to launch version well, 2.0 or 1.5 or whatever it is. Because the minute you launch these things, you realize all the proptech that you missed out or you didn't know about until someone sticks logos on a page. Right.

Isaac Coonan:

Nothing drives FOMO for a startup like not having your logo on. A best way to do it. Love it.

Kylie Davis:

Absolutely one of the most engaged with posts on LinkedIn that I've ever done.

Isaac Coonan:

I remember when I saw the comments I was like surely that's impressions, surely that's not number of people commenting. But it was great, that's exactly what we needed.

Kylie Davis:

There was hundreds. Hundreds and of comments. Now tell us so what are the key findings of this year's Impact Economic Impact Report for Proptech?

Isaac Coonan:

So we decided to actually distill a lot of the key information into one of the first pages of this year's report. Pretty much for anyone who wanted to get that snapshot, like what are some of the key findings or key deliverables from this year's report. So we're really happy that we did that. It's pretty much kind of setting the scene for the report. I would think some of the biggest takeaways for us personally from this year's report is the just rapid attraction of startups to New South Wales. So last couple of know Queensland has done a very good job in terms of number of companies founded, but in terms of numbers of companies registered, like what state were they registered in? There was just this massive decline from Victoria and Queensland into New South Wales. So what that really kind of paints a picture for us and for the rest of the economy is that there's something right in Sydney in terms of Sydney is being seen as a city or a state.

Isaac Coonan:

If you look more broadly New South Wales as a desired go to spot to grow a scaling prop tech business. Now the ideas aren't founded there and that's very clear and evident by the report. However, when you just look at the number of companies that have registered in New South Wales so they have made the strategic decision not to just hire in New South Wales but to actually register there. That's quite interesting for us and selfishly as a proud Queenslander. It's also really good data to sit back and be like, okay, if we're making these companies, why the frick aren't we keeping them? And if we're not, why, what can we better same for? Honestly, Victoria, South Australia should be asking the same questions as well. So that was, I would say, interesting.

Kylie Davis:

Did the data show any reasons why that was the case?

Isaac Coonan:

No, it didn't really do ask for a lot of information. And one of the questions we do is like the go to market strategy. And for a lot of companies, one of the main avenues to go to market is still through engagement at events, conferences, forums. So I think, you know, there's obviously a high number of events within New South Wales and Sydney. Also, when you look at commercial real estate, I would say more so than residential, but really commercial real estate, a lot of the big head offices are in Sydney. It is also very much a global city. I think Brisbane is going to come into its time, particularly with the Olympics now in the pipeline. I do feel like Brisbane has the opportunity to recreate itself as a global city. I will say though, when we did ask the know what's, some of the feedback you've got in general, a lot of founders were indicating that they were leaving Victoria just because they found that Melbourne CBD was just nowhere near as engaged as Sydney or Brisbane.

Isaac Coonan:

So I question whether COVID had something to do it, particularly for Victoria. Particularly for but I think honestly, we know this is a hypothesis, but I really do think it's well, Sydney's considered a global city for commercial and built environment.

Kylie Davis:

Well, as a proud carrying member of Sydney City yeah, one. So what else do we find? We have this Brisbane Sydney thing going all the time. Right, that's fine.

Isaac Coonan:

I think one of the interesting things that I really liked was the number of jobs. When we look at proptech from the companies that we surveyed, and bear in mind there was just over 200 companies that we surveyed. Your map alone articulates that there's a.

Kylie Davis:

Lot more than 240 something. Yeah, I think was what we landed on.

Isaac Coonan:

And so what we're very proud of is that of the companies that we profiled, we're able to identify the better part of 6000 jobs, support the economy. And there's a couple of big players that contribute to that. Like, you take companies like simPRO, like PEXA, who have a high number of jobs, but they don't make it up. All of it. But what I really liked, and this is just a really good indicator of economic growth, is that we captured through the report the better part of 1500 new jobs that were created in the past twelve months. And where this is different is this isn't a role that existed in the company where someone's resigned and they've just filled the position this is a brand new role that didn't exist. And while simPRO and Pexra are some of our larger proptech companies that are big recruiters, they haven't been doing a huge recruitment process over the past twelve months.

Isaac Coonan:

Which again really shows when looking at the data, it's a lot of those mid tier prop techs that have had to really increase their FTE. So from an economic output viewpoint, that's a significant contributor to the Australian economy. This industry not only employs a lot of people, but it's still growing and it's growing pretty quickly. So really like that. The statistics around funding, they're never great. It is good to see that we did have an uplift this year in terms of capital being poured into proptex founded by females up to 19.5%.

Kylie Davis:

That's going to be offalo based though, isn't it? That data going to be a little bit funky because there's not that many of us.

Isaac Coonan:

You kind of want to say, hey, this is a great, it's an increase and every increase I do should be celebrated because we're never going to get to 50 overnight. No going from 16% through to 19%.

Kylie Davis:

That's cool.

Isaac Coonan:

It's still nowhere near where it needs to be and still unfortunately below the national average for tech startups as a whole. So unfortunately that's still the case.

Kylie Davis:

What was the male female split for the respondents?

Isaac Coonan:

Did you see 79% of Australian prop tech companies are founded by men. 79.3 if we wanted to be. Okay, accurate.

Kylie Davis:

20% are female. She's kind of in the zone.

Isaac Coonan:

This is what we're expecting. That number again has the percentage of male founders of Australian prop tech companies has decreased again. So we are seeing a slight more gender balance. And it's always helpful when we've got awesome new prop tech companies coming through like Spec who are founded by Nikki andrea in the commercial leasing space. We are seeing a lot more female.

Kylie Davis:

Analytics, navalytics, some great ones out there.

Isaac Coonan:

But even in the past twelve months that have been started, they are coming through the pike. I think what we're keen to do is also demonstrate how it's been done. I personally love the story of Nikki Andrea. They started the company, they founded it, they kept going, they both ended up pregnant at the same time.

Kylie Davis:

It happens when you sit on the.

Isaac Coonan:

Think, you know, there are a kind of way where it's not one or the other. If you want it to be one or the other, you can. But I think we need to start telling these stories more of yeah, we did, we founded the company, we had a change in our personal life, we hired a CEO to come in and drive it forward for us while we take our foot off the gas. But we're kind of breaking down the mold of well, if you found a startup, you have to give it your entire life and there can be nothing else you need to give it 100% or else you're not a real founder. And there's all these new founders coming through that are kind of looking at that mold, saying in the nicest way possible, get stuffed.

Kylie Davis:

Hell no.

Isaac Coonan:

I can build a successful tech business but also go and have a family or also have a holiday or also make sure my mental health is in check.

Kylie Davis:

Well you have to, don't you? To get the balance right. That's so funny because I know that Zoe and Marta from Open Agent both got pregnant at the same time twice.

Isaac Coonan:

Phenomenal. But I think it's just it's possible.

Kylie Davis:

Girls, you can do it. You need a good team around you, but you can do it.

Isaac Coonan:

So that was quite an interesting stat. One stat that I thought was I'm actually undecided. I don't know if it's a good stat or a bad stat, but it's.

Kylie Davis:

A stat unpack it. Let's workshop it.

Isaac Coonan:

One of the things that I've always loved particularly about the proptech industry is a very large amount of proptech founders are people who have got a ten year working in the property industry. And what that generally tells me is they've got an intimate understanding of the pain point they're trying to solve or they've got an intimate understanding of how they can push their product into the market. It's still the case but the average ten year has dropped. So I think last year's it was over ten years was the average tenure for proptech founders who have experience in the industry. This year it's 5.6 years, so it's nearly half.

Kylie Davis:

Wow.

Isaac Coonan:

And what that's telling us is a lot of these new tech companies that are coming to fruition that have launched over the past twelve months, they've got a significantly less, if any background in the prop tech sector. So that could be an amazing thing. Maybe more people who don't understand the nuances of the property industry means we're going to get solutions that aren't being created with a jaded perspective. I don't know, but I always thought the thing that made proptech so unique is it was the property industry leading it. It was industry veterans who got so pissed off with a certain inefficiency within the sector, they're like, you know what, we're going to go out and we're going to create it and we're going to make it built for our industry. Where we're kind of in a shift where it's a lot of people who don't have experience in the property sector starting prop tech companies or they don't have as long of ten years.

Isaac Coonan:

So I don't know if that's a good or bad statistic.

Kylie Davis:

I think that's probably a reflection of our growing maturity as an industry when I've reflected on how the industry is changing and growing. Our first round or first flood of prop tech has been focused very much on efficiency and optimization and admin and back processes and saving time and money and doing things better. And that's definitely the place where if you've got experience in the industry, you're going to completely shine because you know what those pain points are. What we're seeing now though, in the startup space, and I know this from the awards because we've just closed the Proptech Awards is that our biggest category this year is actually data AI and Insights. Like data analytics, AI and insights. Now this is the first time we've ever run that category as sort of a change from smart cities, but it's got more entries than anything.

Kylie Davis:

And in fact, when you look at all the startups, where they're coming from, that there's a lot of them happening in that data and AI space that we're seeing. And I wonder if that's and that's something that if you're in real estate, sure you're going to know how to create a CMA or you're going to know how to use data that's been given to you, but actually knowing what to do, how that data, know the serious data science background. You're going to need to be from that background, not from real estate necessarily.

Isaac Coonan:

I like how you describe it's. Kind of like the evolution we needed to walk before we could learn to run. And I think that's a really good yeah, a lot of the tech companies we're seeing out there, like even when you look at the report this year of everyone who submitted, I think it was over 50% of all companies were in and around the property management space. So it was like virtual or residential. There was a lot in that property. Well, how do we actually manage or how do we actually do the doing more efficiently? And so I feel like to your point, there's a lot of all right, well, let's just get some of the basics sorted. It's an awesome thing not knocking anyone's business. Like getting the basics sorted is absolutely required. But maybe you're right. Maybe it's like, oh, now we know how to collect the data, how do we use it?

Isaac Coonan:

And maybe that's where we're going to start seeing some more of those tech forward or truly tech innovative solutions coming to the pipeline.

Kylie Davis:

Yeah, I think we've gone through a period where especially in that property management facility space, where we've seen automation around key tasks to make that faster and better and more consistent. And now that they're getting better, we're now seeing the overlay of AI onto them to actually say, if this happens, I know to do blah as opposed to please set my tasks up to do this right. So you've got that happening in the property management space, AI instead of just automation. But then also I think the next generation is and what we're starting to see is this increase in consumer apps. Now you do not have to have worked in real estate to know that buying, selling or renting a property is really freaking painful. Anyone who's tried to participate in the space knows that's painful. And if you've got a data or a programming background or you've done good UX, you've probably got a head start.

Isaac Coonan:

I would say the only bit of advice I'd give then to any of those companies who don't because I agree with you can absolutely build a great tech product without working in the industry. I would just say make sure that you're either part of the product association or you go to your local REIA or something because we're seeing it too often, particularly with the younger tech companies kind of coming into market. It's very bull in China shop we're going to solve this for you.

Kylie Davis:

Not solve, if you take solve it.

Isaac Coonan:

For you approach, sure you might eventually be able to do it but holy crap, you're signing yourself up for a.

Kylie Davis:

Painful totally, absolutely agree.

Isaac Coonan:

Don't have that ten year actually a question I had for you off the data.

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Isaac Coonan:

One of the questions we always end the report with is, hey, what do you think is going on in the ecosystem? What do you think we can be doing better? What can we doing less of? What can we do more of? And a really common underlying thread that we saw from the feedback in this year is we love what's happening but there's almost this trepidation that prop tech is going to become more important. The buz for proptech is going to become more important than the solutions being created. I hope not reference to the fintech industry, they're like, oh, fintech became this big thing to the point where the banks and everyone didn't want to engage because the hype was bigger than the outcomes. And I know that's not what I'm trying to do with proptech beanie and this report. I know for a fact it's not what you're trying to do.

Isaac Coonan:

But there are a lot of people who see the growth of prop tech and are trying to get involved, and how do we kind of ensure that we continue the excitement for a growing technology cluster without letting the hype of it kind of overshadow the tangible solutions that have been created? Because that's something we're trying to unpack as Proptech B and E. It's like, well this is great feedback. You're not wanting the hype to be bigger than the actual solutions. Well how the hell do you how do we look?

Kylie Davis:

I think we need to be really honest and real and grounded around the solutions that we've got and make sure that we are solving real problems that need solving and making sure that we're solving them to a high level that doesn't create other problems as we go through. So I think it's around us being really mindful of it as an issue and making sure that we don't sort of talk up things as the best thing since sliced bread just because they are tech but actually making sure that it does what it says on the tin around it. And I see this sometimes and I'm probably going to get some hate mail from this, but what were just talking about is do you need expertise in the area and how important is that? I have an issue with Prop Tech that is trying to sell off market sales prop Tech because I don't see that is a solution looking for.

Kylie Davis:

I don't see that as a problem and I don't see that it needs a solution and I don't understand why you would go after money for that to then oh you there? Yeah, I don't know why you would. A 2% commission from a real estate agent is not the biggest affordability issue in real estate at the moment. Supply, construction, building, planning, development, those are the big problems that we need to be looking at as an industry. They're the big chewy problems that we've got to get behind our industries to solve and to make. I don't know how we do that, but that's what we've got to go out and going out to market and saying this is the next best thing since sliced bread and all consumers need it just convinced. Do they really? No, I don't think they do.

Isaac Coonan:

I do think that ties into it as well because one of the conversations we've been having internally is well if we're not wanting the hype to overshadow what we're trying to do, the last thing like how we're interpreting that is let's not make Proptech bigger than what it is. Prop Tech is tangible, real solutions for the property industry to allow them to keep doing what they're doing but do it better and more efficiently. And last thing we wanted to feel like is that it's unobtainable or because it's so Proptech is now this big thing and there's so much excitement around and so much talk. Me as a local real estate agent or me as a small developer, it's just too big. You have to be one of the big guys to play in that space. So I like your point around remaining grounded, because I think that's a big part of that accessibility for the broader industry.

Isaac Coonan:

It's not bigger than Ben Hur. It's not unobtainable, it's not overly futuristic. It's just a term to describe solutions to enable our industry and help it evolve.

Kylie Davis:

So I think and look, I think also, it's not just our job to make things more efficient for existing players in the space, but I think it's our job as Proptechs to also empower the disempowered. And real estate is a very unusual beast in that the buyers and the renters, the people who show up with their cash in a very large duffel bag, because that's what you need. It's the only payment experience you can have in Australia, where the more money you turn up with does not in any way guarantee you an improved service level, because our legislation and our business model is a bit upside down and real estate agents represent the sellers or the landlords or the investors. So. I love proptech. That does create transparency and it redresses the balance in that consumer space. But I think we're unlike banking and fintech, where fintech came out, as in we're going to disrupt banking and we're going to steal market share away from them, and we're going to completely revolutionize banking and do it differently.

Kylie Davis:

Which is quite a threatening David Goliath thing, but a threatening kind of statement in proptech, because most of our clients, we're a market of small businesses, basically, in the large part, the majority of money is sitting in the transactions that are managed by small businesses. So I think there's the volume play that you can get more people on board to support you as part of that as well. And look, as anyone who has worked in Proptech and has got real estate agents as a client, the feedback is pretty clear.

Isaac Coonan:

Sometimes why we decided to publish it when we decided to publish it as part of this year's report, because the amount of feedback we got was just like, it's great. The ecosystem is growing, but are we ensuring that what we're doing is remaining true to our core? Like, for Proptech B and E, it's ensuring that there is a direct line for Proptex to customers here in Brisbane, that's what we're here to do, is kind of do that customer acquisition, kind of for us, it's been really good. It's like, okay, do we want to do it because it's cool or are we doing it because there's actual value to be created and that's being very cool?

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Kylie Davis:

Awesome. So what else is in the report that we need to talk about? What else has come out? What sort of surprised you the most?

Isaac Coonan:

Look, honestly, the surprise was the continued growth. I think that was quite interesting. I honestly thought that there was going to be I feel like a lot of Prop tech has gone from zero to 100 due to COVID, particularly in the residential real estate space. I think COVID was such an awesome catalyst to kind of demonstrate within commercial too, right? Within commercial, yes, I do agree. However, I think whilst there has been a lot in commercial, I really do feel like it was the time for resi to shine. Just because at the end of the day people could not go into the office for a period of time that's fine. At the end of the day, people couldn't just not rent or buy because it was a matter of, well, we need a home, we need someone to live.

Kylie Davis:

It's never more important than when you're in the middle of a pandemic to have somewhere safe to be, right? Yeah.

Isaac Coonan:

I feel like during the pandemic there was that real crunch to be like, holy crap, we need to make sure we can still get people into homes and transact rental agreements or transact sale agreements. I feel like Rezzy really came up. Look, as a pessimist, I was really kind of sitting there being like, there's going to be a cliff the second we come back, the second that COVID, the impacts of COVID are minimized, it's know we're going to be taking our foot off the accelerator and we'll go back to Bau. We haven't seen that across the board. There's a few companies that obviously created very niche solutions to support the sale process during COVID which there has been a slight decrease, but across the board numbers are going up. Thankfully, a lot of the companies that have submitted their data as part of this year, they've done it for the past three years, consecutively.

Isaac Coonan:

And so being able to look at that growth year on year and actually see numbers that are showing good, steady growth, I think that's quite for me, it's actually a bit surprising. I don't know if you're the same or if you have a more positive look on the world, but for me I was kind of, well, yeah, once the necessity goes, it's going to dry up. But I think there was a long enough. Cultural change that we're seeing long term adoption.

Kylie Davis:

I have a theory around this based only on anecdotal stories that people have told me, but especially in that property management space, in the residential space. And having written the reports for MRI around Voice of the Property Manager I've done the last two for them. I have a theory that a lot of property managers out there, which who we know are women in the main, young women who have felt a bit neglected by their principals and not necessarily invested in, I think the COVID pandemic, those girls were our frontline workers or those workers. So there are guys in property management too. So our property management teams were our frontline workers during COVID and they were dealing with all sorts of stress. And so to get them through that, principals were literally saying, what do you need? You've got it's yours. And so they got a lot of stuff that they had been asking for or got to see or experiment or try stuff out or got the space to try stuff out that they hadn't in their normal work.

Kylie Davis:

And then when COVID ended, they're like, well, you're not taking it off us. I am going to be working from home two days a week or I am going to be leaving at three and I am going to do this stuff at home. I'm okay with that. We've proven it works. You don't have to tell me I have to come back in. That is anecdotal, but I've heard quite a few anecdotes along those lines that people are like, well, you're not taking it off us. And so that's where the step change came in. That the principals that are going, oh, I don't think we need to worry about that, or, I think they're coping just fine, or it's not really that important. Suddenly it was important.

Isaac Coonan:

Yeah, it was make or break. Yeah. So in terms of what surprised me, there was definitely that it was a good surprise by I think it was a great surprise. And then yeah, again, just going back to my original comment, I think it's still like the sheer number of companies that are migrating to New South Wales. I think that kind of take you got to take your hat off to whatever New South Wales is doing. And Sydney is still obviously perceived as an epic city to grow startups. But in terms of surprise, I think the sheer number, the percentage shift was really impressive. And again, anecdotally, you know, when you know something anecdotally, so many companies were like, well, we're going to move down to Sydney because there's investors, so we're going to move down to Sydney because we're going to move our team to the US.

Isaac Coonan:

And we'll just have a satellite. I was in Sydney and it works better from a global market perspective to say that you're in Sydney versus or you're in I think there's that perception know it's good. I do think that, if anything, it should light a bit of a fire under everyone else's arse, all the other states outside of New South Wales to say, all right, well, look at WA. WA is actually performing very well, all.

Kylie Davis:

Things considered, from a heap of innovation coming out of WA. Shout out to calendar.

Isaac Coonan:

Yeah, exactly. What are you doing to retain it? Look at Victoria. Like, why on earth are you losing 9% of your Prop techs year on year to New South Wales, Queensland? Why are you losing?

Kylie Davis:

The melbournians won't like that.