Purplebricks Group Plc (LON:PURP) Chief Executive Officer Michael Bruce caught up with DirectorsTalk for an exclusive interview to discuss their IPO, the company’s background, the online market and how the £25 million fund raise will be spent
Q1: Now Michael, if I can start by asking how does the Purplebricks Group model work? What makes it different from any other offerings in the market?
A1: It’s very different in that it’s a pleasant mix between technology and people so first class customer facing technology and professional local property experts who not only do all the things that you would ordinarily expect them to do but also they have responsibly to look after you right through to the day you move out. So I suppose the market has consistently been one where you have traditional bricks and mortar estate agents and that you have some online agents that have been around about 7 or 8 years and the online agents haven’t really made their mark because what they thought that if they manage to get you on Rightmove and Zoopla then that would be sufficient. Ultimately what thousands of customers have told us is that they still want that local expertise, they still want someone to give them a valuation of their property, look after all the administration and also make sure that not only are they going to save the money at one end but also at the other end, they’re not going to cost them money so they’re going to get them the best possible price. So what we’ve done is managed to mould all that together to not only give them that local expertise and someone whose responsible not only to give you that valuation but to look after you throughout but also to build technology that, for the first time, ensures that everything that somebody promises in the living room is going to happen actually happens in real time, 24 hours a day so 70% of our traffic happens when traditional estate agents are closed.
Q2: Indeed, so all in all a much better experience for the end user buying or selling?
A2: Much much more convenient, much more transparent and thousands of customers have already reviewed our service and told us that actually it’s a light bulb moment for them and they’ll never go back to a traditional model.
Q3: How long has the business been trading and how did it start?
A3: So I used to be CEO of a traditional estate agency model. Being a CEO of an agency where you’ve never been an estate agent is an interesting proposition because it enables you to look at the business in a wholly different way. What I couldn’t understand is when you mention the word ‘estate agent’ people have a fairly wry smile and an inner feeling of unhappiness and reality is I couldn’t understand why, I worked with brilliant people who gave a great service who loved their customers but there was a fairly poor reputation for the industry and I think that’s very much based around model. So what I wanted to do was say look is there a better way of offering customers something much more convenient, cost-effective and transparent, I also had a team of people go out, about 9 months prior to selling my traditional high street estate agency group, to find out whether or not there was a way in which we would could work a more cost-effective model alongside the traditional model and came to the conclusion that wasn’t possible. So we sold the business in order to build the Purplebricks proposition and that was four and a half years ago and we worked tirelessly from then through to two and a half years later to when we launched the business in late April 2014, having built the technology, built the infrastructure, recruited and trained all of our own local property experts and also put together a really robust marketing and advertising strategy which included TV, radio and other forms of media.
Q4: How big can the online market become and what share does Purplebricks currently have of that market?
A4: I think the online market will progressively grow now year on year, just to give you some context, we entered the market and it was around about 1.5%, we’ve more than doubled that market in 12 months. We think that the online market can take up to 40% to 50% of this market but what is really really important is in order that we’re enable to grow our market share is to ensure that we can demonstrate that we’re a real credible alternative to what exists today and we can continue to offer really cost-effective transparent methods to ensure that people have a really really good service. I think if we do that, we feel that we personally can get to 30% to 40% of the market and currently we have around 2% of the market after just 12 months.
Q5: Ok, so you’ve just IPO’d, what are you planning to do with the £25 million that’s raised for Purplebricks Group Plc?
A5: Well several different aspects, I mean we deliberately started the business with a concentration on sales but we want to continue to build on a launch that we did in July this year in London of our lettings proposition. So we want to invest some money, like we did in sales, in getting our message out there and offering landlords a really great service that’s much more cost-effective than what currently exists in the market. We also want to invest some more in our sales in London, London has consumed media in different ways than other areas of the country, they don’t tend to be sat watching TV at a certain time of the evening consuming media so we want to be front of mind in relation to those so a bit more working harder on that. We’ve just launched in Scotland where it’s a very very vibrant type market there in certain areas of Scotland and we want to build upon that. Also there’s our technology which is the first ever technology to be built of this nature and to this extent in this industry and we feel that that there can be effectively transported into other regions throughout the world so we want to sort of spend some time really looking at how we might achieve that.
