There’s something special about the number 100. In sports, the American football field is 100 yards long. In science, 100 degrees Celsius is the boiling temperature of water at sea level. In finance, most currencies are divided into 100 subunits. So, when a high growth start-up I invested in five years ago increases in value by 100 times, for me, it is a special moment…and worth pausing to write about.
The birth of Emoov
It was summer 2013, before the term ‘proptech’ was even coined. My team and I were developing an unhealthy curiosity about the innovation happening at the fringes of the property sector. We were a new venture capital shop with only two years and a handful of investments under our belt. We didn’t even have a fund to invest; keeping it simple and scrappy, we were investing our own capital and creating syndicates with other smart, like-minded investors.
I had a premonition that the property market was about to undergo a sea change as it came out of the financial crisis, and this spurred my interest in finding a digital upstart looking to disrupt the property market. To broadcast my interest more widely, I featured an early piece in PrimeResi in April 2013 titled ‘Looking for the next Rightmove’, which was a call to action to all the ‘crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes’ (in Steve Jobs’ words) of the property sector to come forward and talk to us.
This is how I met Russell Quirk, the founder and CEO of Emoov. It was early days for Emoov, but Russell had accomplished a lot with very little, an early sign of his resourcefulness and tenacity. After weeks of mutual courtship and rigorous due diligence, we took the leap of faith on Russell and Emoov and in December 2013, led the first external investment into the business, valuing it at £1m.
Less than five years later, on 30 May 2018 (a date I think will go down in history as the tipping point for the rise of the digital estate agents), Emoov surprised everyone, leading an industry-defining merger, pulling together rival online agents Tepilo and Urban into a £105m deal, positioning it as the industry’s consolidator and potentially the biggest threat to the market incumbents.
The journey from £1m to £100m has been one hell of a ride, packed full of surprise, suspense, fear, and nerve-wrecking danger. It has not been a ride for the faint-hearted, but the founder and his team have done a stellar job at maintaining the resolve to get us through to the other side.
As I now step off the board and pass on the baton to new investors and board members, I have reflected back to the early days of Emoov and have attempted to share below the highlights of some of the lessons I’ve learned along the way:
Ignore the Naysayers
Online estate agents made up less than 1% of the sector at the time we chose to invest in Emoov. There was no short supply of naysayers. Traditional agents told us we would lose all our capital. Even some of our internal team members didn’t support the deal. Ultimately, it is down to the person leading the deal to ignore the naysayers, back his or her own judgement, and move forward with conviction.
Back Aptitude, Not Perfection
Russell would himself admit that he wasn’t the most polished start-up CEO when we first met. He was imperfect, just as I was. This was his first time seeking external investment, and it was my first tech venture deal. Neither of us really knew what we were doing. But he was a brilliant communicator, and I sensed a doggedness in him that showed itself in flashes in those early conversations. This was the personality trait that got him from one cliff-edge moment to another.
The key lesson for me was this: Russell was far from the finished article when we met him, but he had a high degree of aptitude. Over time, he learned about everything from start-up finance to fundraising, board politics, hiring and managing talent, networking, and PR – the key skills you expect from a CEO. Although I don’t claim to have had 100% foresight at the time, I’d like to think we backed Russell not for the person he was, but for the person he was going to become.
When an old industry goes digital, don’t look at what would happen if you only took 5% of the market. If you’re transforming the business model, lowering costs, and creating a genuinely improved customer experience, all wrapped up in a brand that you believe consumers will love, you should be aiming for the number one spot.
Our early conversations with Russell about ‘opportunity size’ were underwhelming. Neither of us really knew how big this opportunity would be, and the range discussed was as low as £10m and, when we stretched our imaginations, we talked about creating a £100m business. While we didn’t quite know how we would get there, both we and Russell consciously decided from the get go to think big.
Fundraise, Fundraise, Fundraise
There is a school of thought that suggests that if you build a superior product which customers love, you can win. This thinking is inherently flawed because it ignores the resources required to hire the best talent and invest in the sales and marketing machine to acquire customers. What’s the point of having the best product and tech if you can’t acquire customers at scale?
For this, you need a war chest, and I’ll be the first one to put up my hands and say that in its early days, Emoov didn’t do nearly as well at this as its rival Purple Bricks. If we were to go back and do it again, we would have raised capital early from deep-pocketed investors who had the willingness and capability to follow on, and we would have raised a lot more capital than we actually needed.
I’ve got options
The world of start-ups is rife with dead-ends, U-turns, and detours. When you’re navigating this terrain, you often don’t know which path will be the dead-end, and which will lead to the ‘promised land’. Emoov managed this uncertainty brilliantly as the founder always had a Plan B, and a Plan C, and a Plan D. He was determined to de-risk the business and not make it overly reliant on any one path. Ultimately, this multi-layered strategy has made Emoov a survivor in a sector that has seen and will continue to see many casualties.
What the first investor experiences in the initial five years of a company’s life is often its worst... and its best. One gets to see the early excitement surrounding the founder and his idea, but also many of the trip-ups that come with corporate childhood. As an early stage investor, I’ve had the honour to work alongside Russell Quirk as his first investor and board director and see him grow from a novice to a seasoned and savvy CEO. I’ve seen incessant churn and sickening volatility. But all that was necessary to get the company to where it is today - an undisputed number two and a credible IPO candidate, gearing up to take on the infamous Purple Bricks.
The number 100 sure has historical and symbolic significance, but to me, it marks not the end goal but merely the end of the first chapter in a much longer journey. I rather prefer the number 1,000 actually. Think big, remember.
Faisal Butt is the CEO of Spire Ventures, and the founder and chairman of Pi Labs.
Image credit: Phonlamai Photo/Shutterstock