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 Scott Bateman, CEO of Property Management, Proptech Kolemo.

Kylie Davis

Scott's career started in banking, working with BT Financial Group and bank of Melbourne, before he was convinced to join Little Real Estate, founded by billionaire businessman and philanthropist Paul Little. Paul was the Managing Director of Toll Holdings from 1985 until his retirement in 2011. In this interview, Scott tells us the rather fabulous story of how the legacy technology stack of Agent Plus both pivoted and accelerated to become colmio during the COVID pandemic and lockdowns. And it was a transformation that Scott describes, like jumping out of a plane and assembling a parachute. But it took call meo from concept to running some of the largest rent rolls in the country. And it's a cracking interview. So, here to tell us all about it, Scott Bateman. Welcome to the Proptech podcast.

Scott Bateman

Great to be with you.

Kylie Davis

Look, Scott, we always start off with the hardest question first, which is your elevator pitch, but I'm really excited about this conversation because I am really wanting to hear the backstory to comeio because I know there's a lot in it. But first of all, what's the elevator pitch?

Scott Bateman

Let me do my best with 60 seconds you need yeah, well, there's that. So Kolmeo is an end to end property management platform that we are designing to try and help kind of reimagine how property management works both from the view of agencies, owners and renters within that where we focus is really kind of reimagining customer experience thinking really differently about the business economics of running a property management business and then helping businesses that work on Kolmeo compete really differently. So this kind of strong focus on differentiation and growth. It's Melbourne based team. There's 130 people in the team, so it's quite a big product. We replaced a product that had been in market for about 15 years called Agent Plus, which was much loved but had neared end of life. So we're fortunate to inherit all of their IP and everything they'd kind of learn, which was super helpful for us.

Scott Bateman

We went live at the start of 2021. We have been fortunate to bring on some of the biggest rent roles in the country, including both the biggest and second biggest. And we move about a billion dollars a year through our payments tech already.

Kylie Davis

Wow. Fantastic. So that is a very good quick summary of kind of everything. But what I now want to deep dive into is so tell me about how Kolmeo started and about the story with Agent Plus.

Scott Bateman

Yeah, so Agent Plus was actually in its initial iteration and product called Rpm and it was built by this property management business called Run Property that those that have been around long enough would remember. Run was one of the few businesses that had become multi office and what they were finding is that there wasn't really software designed for large scale multi office businesses. Everything was kind of the pokey 300 property rent roll. So they built this product over the next 15 years they continued to iterate on it and made a terrific product and it was really well suited to businesses with kind of several thousand properties. So they brought on a few businesses that did that. Over the next sort of 15 years it got built out and built out but was nearing end of life. And at the same time that was happening, I joined Paul Little's real estate business just to kind of imagine what could be in property management and try and solve some of the big issues were wrestling with in that business.

Scott Bateman

So these two things are kind of happening concurrently. There was a rebuild underway with a bit of software that he owned and there was this vision that were starting to kind of shape up around what could be which was kind of called Lolmeo. And we said, well why don't we get one to do the other? So let's replace the Agent Plus product with the Kolmeo product and then once that's live and in people's hands we can build on that and do all the exciting stuff.

Kylie Davis

It sounds to me like you were trying to build a Ferrari while it was still on the track. Like still racing around the track though. Tell me how that went.

Scott Bateman

The adage actually that we used at the time was we've jumped off the cliff and we're trying to make the parachute on the way down. It was awful. Like truly awful. There's no way to sugarcoat it was awful. It's challenging because we got the go ahead to start this. At the start of COVID and being Melbourne based, we recruited 100 new people into the team during lockdowns. So whole team that's never met each other, working on a product that was not really fully understood. And were in this race against time because we got a very small window to stand up an alternative product to Agent Plus and get customers off that platform and onto ours because the data center that was being hosted on was being turned into a car park.

Kylie Davis

Even during COVID Even during COVID Can you imagine?

Scott Bateman

We had to go to customers. Hey, we're going to support you as best as we can, but we've got to warn you, this is going to be really bumpy. And to their credit, they got us through it as we tried our best to get them through it. And for the most part, I think the pain and the struggle has been worth it in terms of where we are now and what we can do for those customers now. But it was very challenging.

Kylie Davis

So just help me understand a little bit about more about what the size of that challenge was. How many properties under management were inside the Agent Plus rent role when you discovered that inside the system, when you discovered that your data center was going to be turned into a car park.

Scott Bateman

It was never a hugely adopted platform. And the reason for that is they were very niche in terms of who they appealed to. Part of the reason for that is Agent Plus was also an outsourced trust accounting proposition as well.

Kylie Davis

Right.

Scott Bateman

So it was like four or five times the cost of alternatives, but you got all the trust accounting done by them at the same time. Okay, so there was probably about 30,000 properties across that platform at the time. And by the time we finished that migration, were working with customers at some point saying, hey, we are worried about our ability to get you through this. We actually think you are better served finding another product and we'll work with you to help you do that. And for the bigger groups that we could actually nurse through it, that had a bit more resilience and a bit more ability to adapt to some of that stuff they've come across. So there's probably sort of half of that came across from the Agent Plus business and then we've added the rest since.

Kylie Davis

Right, okay. But basically you have turned a legacy pieces platform into a cloud based piece of platform, running some of the largest rent rolls in the country with a product that was not built and unproven spot on, the world's biggest pandemic.

Scott Bateman

Yeah, we love not sleeping.

Kylie Davis

Yeah, great job.

Scott Bateman

It's on reflection, you kind of go, why did we do this to our.

Kylie Davis

Well, look, what else did you have to do during lockdown in Melbourne? It was probably the distraction was really welcomed by everyone. Thank God we've got something to think about.

Scott Bateman

That's not we joked at the time, we're going to make these T shirts that says, I survived the pandemic and all I got was this proptech platform.

Kylie Davis

All I got was this prop. I look, I think that would fly. I think we should get that done and sell it at the Prop Tech forum in October. I love it. So tell me a little bit more about what Kolmeo. Does that differentiates it from other property management platforms out there? Because it's a very busy space, right?

Scott Bateman

Yeah, it is. Look, it's a long list thankfully, but I'll try and sort of focus on the key things. The way you manage property on Como first and foremost is completely different. So Kolmeo is a workflow driven system which works around this kind of dynamic to do list. So if we think about the way best property managers think, and I mean this with the greatest compliment, they are kind of manic control freaks.

Kylie Davis

They start this list.

Scott Bateman

So Kolmeo literally works around that. So their whole kind of initial entry into the software is every single thing that you would ever do exists within this contained dynamic workflow environment and within that we work with them to prioritize and escalate the things that are most important, urgent and so on. That workflow can move between people and departments. Every single job you do exists on that same style of workflow. So there's not like a maintenance section and inspection sections. It's all within that one piece. Our payments technology I would argue is really one of a kind. So we do both payment rails and Trust based simultaneously and we call this a hybrid product. So we've got customers that will run 98% of transactions without it going to trust and then we've got others that run a quarter of their rent roll through trust because they've got multi property owners, they don't want deposits into their account every single day.

Scott Bateman

So you get the best of both worlds. Reducing trust account overhead and admin minimizing risk because you're kind of reducing how much money is ever sitting there encouraging people to do cheeky things. But you've got the trust account to remain compliant and do whatever it is that you might need to do with that as well. We support onshore offshore pod portfolio. We've just launched property management as a service for agencies which is the first of its kind. So if you are one of our customers and you want to basically monetize your license, you can go to a sales focused business and say hey, we'll do all the property management for you. It all gets done in our system, it's all done under the other business's brand and they can come to an agreement. So there's different groups in this space that are doing this. We're the first to say to agencies, we think other agencies would prefer you doing it than a software company doing it.

Kylie Davis

Okay, hang on, just help me understand that a little bit better. So I'm a principal of a real estate company or a real estate business and maybe my property managers left and I'm sort of feeling a bit stressed about the whole thing and daunted by the idea of having to replace her. How does that work? What happens next?

Scott Bateman

So with our system we've got a really unique data structure which is kind of part of the legacy of the agent plus product, which has been really kind of fortuitous for us. Essentially the way that works is that we have three levels of data structure that mean you as the kind of primary property management agency that we'll call Agency A, you're running your rent roll and everything's going great. You go to property management company or sorry, you go to real estate company B, who's just doing sales and you can say to them, hey, we've got all the technology, we've got the people, we've got the capability. You might only have 50 properties. So the economics don't stack up for bringing on a property manager full time. Why don't we do it for you? And we'll clip the ticket. So we might have a bit of latent capacity in our team.

Scott Bateman

We'll clip the ticket on the service that we give you Agency B. But Agency B, everything your customer sees remains in your brand. But if you are Agency A, everything exists in that same workflow. So you could have one property manager working across 50 agencies. They've still got that one portal. They see all of it, but no one sees each other's stuff. So it's fully contained, no one is sharing data and so on.

Kylie Davis

Wow, okay, awesome. So if you are a real estate agency that has a very successful, effective, productive property management team, you can basically start to license what you said before, license their services. Now I understand. Okay.

Scott Bateman

Got it. When I was in property management, the kind of constant question we had is what do you do with efficiency? So all this software and automation is creating efficiency. What do you do with it? Because in many cases, it's not as elastic as you'd like. You can't just remove headcount. You can have say you create the capacity for a property manager to manage 20 more properties. If you don't have 20 more properties coming in, that's unrealized. So you've got capacity, but you can't do anything with it.

Kylie Davis

Yeah, right.

Scott Bateman

We're saying if you can create efficiency, let's help businesses then monetize that really differently through the way they can go to other agencies and work with them.

Kylie Davis

Yeah, okay. Can you build a model so that agencies can support property owners as opposed to just investors crusade? Me and Emily Ray White, this is how we want the world to go.

Scott Bateman

I love it. Next year we'll start to play in the DIY space, but again through agencies. So we want to give them the tools and tech so they can go after the self managed market view, being that eventually it's not just the investment property, it'll be their own personal property as well.

Kylie Davis

Yeah, okay, cool.

Kylie Davis

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Kylie Davis

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Kylie Davis

So who are some of your clients? Can you names? Do you want to give people a shout out?

Scott Bateman

I'll give a couple. So we are fortunate to work with Nelson Alexander So biggest rent roll in Victoria, second biggest in the country. Little Real Estate, which is the biggest in Australia, third biggest in Victoria just by state based Exceed in WA is the biggest in WA and probably one of the most extraordinary property management teams I've come across and then a stack of much smaller businesses as well that are at various stages of their growth and coming on.

Kylie Davis

And so tell me a little bit about the background of the company and Paul little's involvement.

Scott Bateman

Yeah, so Paul, I mean for people that don't know who Paul is, if you've ever seen the green toll trucks driving down the road Paul built toll so he took a couple of trucks and turned it into the biggest logistics company in Southeast Asia. When he exited that business, he had a passion for property. So started doing apartment development and construction, wasn't happy with the way it was being sold, so started his own team to do the sales, realized very quickly that the opportunity was actually in property management and a rent role. So he went off and bought a bunch of businesses to achieve a bit of scale. Paul being know he makes big moves, so he goes and finds the biggest rent roll in the country which was run, delists it from the ASX, merges it into his business and overnight becomes the biggest privately owned rent roll in the country.

Scott Bateman

So he is a remarkable guy because the way he thinks about opportunities and people and how you fit all these different pieces together is unlike anything I've seen and I look at the risk that he's taken with what we're doing and the way he's kind of backed us and supported us and it's just extraordinary. I don't know there's many people that would do that.

Kylie Davis

No, fantastic. Tell me a little bit about your background. How did you get into this? How did you get sucked into building a parachute as you jumped off a.

Scott Bateman

Cliff in the middle of COVID Oh, dear. Look, it was not by design, funnily enough, I was in financial services. I was having a great time helping banks make a heap of money and grow and do all that kind of stuff, which is soul destroying, but rewarding, hence the sarcasm. No, look, I didn't mind that, but you're surrounded by really smart people working on challenging problems and that's rewarding in its own way. I got approached by a headhunter who was working for Paul to build out the executive team when he first run rent role acquisition. And I kind of went, I've got no desire to work in real estate. Like, none. And he's, no, seriously, come and meet these people. I said, Mate, I hate real estate. Like, I've been a frustrated tenant my whole life. The last thing I want to do is work in real estate.

Scott Bateman

And he said, Mate, if you back yourself, put your money where your mouth is, work for a guy that has the resources and the desire to change it and go and fix it. And I went to little real estate and had to eat all of my arrogance, all of my assumptions, because it was like really talented people that really cared working in something which was just systemically setting them up to fail. And it was confronting because everything I thought would work and would solve didn't work. And we had to come to terms with that. And then quickly, as we started to build that out, increasingly, I was sort of chatting with Paul on the side about, hey, I think you could do this and this. And the catalyst for it was funnily enough. We went to pitch for a build to rent development on the Gold Coast, which was a 1200 property development up there.

Scott Bateman

We ended up coming second to JLL.

Kylie Davis

But as a consequence hello to our friends at JLL. Sorry.

Scott Bateman

So I went off to the US and a bit of a tour around for all the big built to rent developments and saw how that was all coming together. And we kind of went, well, imagine if we could bring that same style of service delivery to life for agencies that are managing small rent roles rather than these great big kind of corporate behemoths. So we kind of refined the plan, went back and said, hey, we think there's this crazy new world where in part there's smart stuff around property management, but just as importantly, it's this service ecosystem that we'll start to bring to life later this year and early into next year. And for us, that's the really exciting part.

Kylie Davis

Yeah, fantastic. Look, there's a couple of other things I want to dive into. The first is what you just said. What was the stuff that you thought would work, that wouldn't work and why wouldn't it work? And how did that result in you respecting real estate agents even more?

Scott Bateman

I reckon, honestly, the first thing, and I say this with just all the humility in the world because I was proven wrong very quickly, I had made this awful assumption that people just don't care because in my experience, there was so little responsiveness and everything else. And then when I got to the business, I'm like, my goodness, these people, how do you take a 23 year old, give them a portfolio of 200 properties, there's 400 humans that own those properties or live in them and say, go and do a great job of that. And by the way, in most businesses, there's not a lot of corporate support or training and development unsurprisingly. They're burnout, they're disengaged, they're overwhelmed. And all of that translates into great intentions but poor outcomes. So this kind of we always look at the outcome and go, why is it not working?

Scott Bateman

Well, that was the first thing you're saying. It's not about care. It's that we are not setting them up to be successful because of all these other things. The other part I've been playing in the space with the banks, helping them build out wealth distribution. So how do you take a banking customer and sell them life insurance and super and all that stuff? And when I got for Little, one of the comments I made at the time is I think there's a way to diversify into all these different kind of new adjacent revenue opportunities. And in part, one by one, they worked. But what we quickly found is that property managers aren't salespeople, they're overwhelmed. And if you say to them, oh, we want you to do PM, but we also want you to sell utility transfers and insurance and lending and bond, all these things, they go, guys, I just want to manage the property, the.