iProperty in search of that sustainable business model
More a hybrid than a pure Internet company
“WE were trying to raise money for a model that was already proven in multiple, mature markets – that of online property classifieds. Yet people here [in Malaysia and Singapore] told us it was not going to work.”
Patrick Grove, Catcha Group chairman and chief executive officer, said that at the DNA-TeAM Disrupt panel discussion in February, 2013.
I think the sustainability of that model is being challenged by the nature of the property game in Asia, which is different than that in the developed markets.
A key difference being that in a country like Australia (Grove is part Australian), when agents list properties in their attempts to find buyers, the agents can pass on the cost of this back to the sellers. In Malaysia and Singapore, the cost is borne by the agents.
While Goh Thean Eu’s look at the financials of iProperty and its Singapore and Indonesian units highlighted some interesting points, to me what stood out was the business model challenge.
iProperty has already responded to this market reality by going with a hybrid business model that involves producing a print magazine in Malaysia and running property expositions. It is bearing fruit, with the company disclosing in its recent 1H 2014 results to the Australian Securities Exchange (ASX), where it is listed, that Malaysia earned A$7.3 million in 1H2014 versus A$4.3 million in 1H 2013.
The majority of the Malaysian revenue is from its events and magazines. While this segment is doing well, especially events, the million-dollar question is, how scalable is this? Not forgetting the formidable competition it faces from the established media companies.
In Malaysia, the leading English publication The Star runs six property fairs a year, grossing over RM10 million. It has a sales team of less than five people.
Meanwhile, in Singapore, iProperty lost its market-leading position, and cut headcount from over 30 people in 2012 to fewer than 10 in early 2013, which is amazing because one would think that with a leader like Grove at the helm, who lives, breathes, sleeps the Internet ecosystem, iProperty would have been able to adapt, adjust and dominate any new competitive threat.
For Grove and iProperty, it is evident that they are in a race to find a sustainable and scalable business model, before shareholders begin to ask hard questions about the dream of a future windfall premised on the assumption that as more work and play move online, companies like iProperty are ideally positioned to capture and deliver most of the value in this new ecosystem.
And for entrepreneurs out there, this is a chilling realisation that if even Grove is trying to find the right business model after almost eight years of iProperty being listed, what more the rest, with much younger startups?
This week’s most read article meanwhile was TableApp canters on with US$78K funding from Crystal Horse.
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