He’d already had a bumpy ride that week. The company’s interim results for the six months ending 31st October 2015 had been released, revealing, on the one hand, fast-growing revenue and numbers of sales people but on the other, widening losses. All of which had been received by the Daily Telegraph, and many traditional agents, with a resounding raspberry.
Back at the airport, Michael Bruce is also worrying that many agents don’t really understand that Purplebricks isn’t an online agent, but rather a hybrid.
“Vendors still want a face-to-face property expert who can give them that initial help, support on price and service,” he says. “But vendors are also happy to embrace the technology that makes the whole process much more convenient for them,” he says.
By technology he means Purplebricks’ eZie platform, which enables vendors and landlords to manage their property rental or sale online, be it the valuation, instruction, sales or post-sales processes.
It is a sophisticated version of the software that many online agents use.
But Michael is keen to point out that the difference is that his Local Property Experts (LPEs) – he prefers not to use the word negotiator or agent – handhold the vendor through the process, take the pictures and write up the listing as well as advising on the for sale price or rental value.
“I think we’re very different from the other online agents,” he says. “From our perspective we’ve invested massively in technology and in people whereas the other online and non-traditional competitors haven’t quite done the same.”
One criticism many traditional agents level at Purplebricks is that its LPEs are under qualified and inexperienced and cannot offer the same service as an experienced agency professional. It’s a question that prompts a pause at the other end of the phone.
“I want to be absolutely and utterly clear,” he says. “Our LPEs are some of the most experienced people that I’ve worked with and most of them have more than ten years’ experience of estate agency and valuing properties.
“They all have a considerable amount of experience in the estate agency world including as branch managers, senior branch managers and valuation managers. “To say that they are not experienced, to say that they are not people who have substantial experience in running a branch or even an area, is not true.”
Michael makes some colourful claims about why agents should join his army of 160 or more LPEs. This includes being your own boss and, he claims, “earning 50 to 100 per cent more than they would earn in a traditional estate agency environment.”
“Also, they’ve got a national brand behind them that’s investing heavily in marketing and advertising to drive valuation opportunities for their business,” he says. “We’ve put in a significant amount of infrastructure to support them, to give them the confidence to know that when they are in their customer’s living room and promising delivery of a service, they know it will be on time every time.
He says that the LPEs work from home and they don’t have to attend sales meetings back at the office all the time. Also he claims they are, therefore, more productive because the technology platform “does all the arranging of viewings, valuations, gets approval for property particulars, puts the properties online and gathers feedback from potential vendors.”
THE BIG DIFFERENCE
“I think our model will tackle the poor public perception of agents – it’s all about a new model,” he says.
“At the moment a traditional agent goes out, values a property and, often, overvaluing that property to get the instruction, ties the customer in for 16 weeks, gets it on the market and hopes the property sells during that period. I’m generalising here – I’m not saying everyone does it that way.
The people who complain about us on these industry chat forums are making assumptions about stuff that they really don’t understand.
“With us, the great thing for the customer is that our LPE is not only responsible for the service promises but also for the valuation they put on the property. So the relationship between the customer and the LPE is much more integrated than it would be in a more traditional environment where that relationship gets fragmented.” There’s one thing that appears to rile Michael and that is the industry chat forum brickbats that are regularly lobbed at him and Purplebricks.
“The people you see complaining about us on the industry chat forums are making assumptions about stuff that they don’t really understand,” he says.
“I just want them to appreciate what our model really is about – we sell thousands of properties every month and at the end of the day a lot of the chat that you see is from people who either don’t want to know what our business does or don’t care.
“There are also people out there who see us as a threat. We’re No.1 for listings and sales in many locations throughout the country and that’s growing and developing all the time.
“So when you watch your peers out there running their own businesses and being successful, I suppose they are an easy target to throw stones at.”
ONLINE V TRADITIONAL
Michael, with his brother Kenny, used to run a traditional estate agency, a 16-branch Midlands agency called Burchell Edwards which they sold to Connells in 2011.
“Several months prior to selling the business I asked a team of people to go out and talk to consumers and find out whether or not we could run a Purplebricks-type proposition alongside a traditional model,” he says. “We came to the conclusion that the ability to do that and remain credible would be impossible. You can’t have one agent offering two opposing methods of selling a home, one for £700 and one for £5,000, when the service offered would be exactly the same. So we took the view that we wanted to offer something completely different and use technology to delivery something better to consumers.”
But what has shocked the industry most is the share issue, which valued the company at £250m at one point in mid- December, although this has moved around in recent weeks as the company’s share price dropped dramatically following the flotation, at one point standing at just 72.5p. At the time or writing it had regained these falls and was at 115p.
Nevertheless, the company floated after just 18 months’ trading, much earlier than Zoopla, for example, which took six years to get to a flotation.
“For us it was a natural progression to go to a share issue,” he says. “We are looking to change the industry, ensure that we can continue to grow our profile, continue to get our message out there, continue to invest heavily in our technology, our people and our marketing.”
Like Zoopla, the Purplebricks share issue is also an opportunity for it to incentivise its back-room staff as well the LPEs with share options, Michael says.
They may well need such inspiring incentives. The company has dizzying growth targets to achieve. By April 2018 it predicts that Purplebricks will turn over £73 million, make a gross profit of £44m and have 385 LPEs.
But, like Michael’s ’plane at the airport, some people are sceptical that the business will take off this boldly – John Ficenec, the Daily Telegraph’s Questor Editor, recently said that he “wondered whether Purplebricks would ever make a profit.”
The next 12 months will be a crucial test for the Michael and the company.