Three Point Zero
You may have noticed that Mark Zuckerberg recently changed the name of the company he co-founded to Meta.
It’s an abbreviated term for the Metaverse, which depicts a future where we have swapped the physical world for the online one.
An online world where a piece of digital artwork recently sold for 69.3 million dollars. Which is 15 million dollars more than Monet’s ‘Nympheas’ achieved at auction.
Its new owner plans to display it in a public space outside a building he owns. Which sounds like something more people can relate to.
Until you discover that he is of course talking about an online public space, outside an online building. Before you laugh, a plot of land has just been sold in Decentraland (an online, virtual only environment) for 2.3 million dollars.
Depending on your viewpoint, this insanity / sensible investment strategy relies on Web 3.0, or the third iteration of the internet.
So we can get to the property stuff sooner rather than later, here’s a whistle stop tour of versions 1.0 and 2.0
Web 1.0 was essentially an online information repository. Static information, accessible to whoever had an internet connection. If you’re old enough to remember, it looked something like this.
Web 2.0 is defined by its user generated content.
The big winners from this space have been organisations like Facebook, Spotify, Google and Apple. By and large, they have made money in three ways, hardware, content and data.
Hardware is the device you’re reading this on.
Content is Spotify hosting your Grammy award winning album, paying you pennies on the dollar for downloads, and keeping the rest for themselves.
Actually, it’s worse than that. They pay artists between $0.003 and $0.005 per stream. So much for valuing creativity.
And your data. Companies like Google own it, store it and monetise it.
Quite effectively too. In 2020 they generated approximately $124,000,000,000 from advertising revenue alone.
If you’re struggling to see the end of the room, it’s not your eyesight. This data centre is 115,000 square feet, and it’s one of 21 across the globe.
Sergey, Larry and Mark have all made themselves incredibly wealthy from selling your data to advertisers. Because as Eddie Izzard pointed out many years ago, no one actually reads the terms and conditions.
Web 3.0 and the metaverse is going to challenge the current status quo, and soon.
Artists and musicians will own and monetise their own creativity, without the need to pay a large slice to Spotify or Apple.
You’ll own your own data, and can choose to sell it (or not) directly to advertisers.
Everything will be in three dimensions, not two. So it will exist on your virtual reality headset, and not your smartphone.
This incredible rate of change got me thinking about real estate, and more specifically, estate agency. Which hasn’t always been the fastest adopter, but it is changing.
I’m going to define agency 1.0 as the pre-Foxtons, pre internet era.
Before my time, but as some people like to refer to it, “good old fashioned agency”.
Listening, building relationships, gaining trust, dispensing the kind of advice you’d like someone to give your grandmother. Black books and rolodexes, BMW’s and carphones.
Agency 2.0 emerged from the dot com bubble, and initially involved Rightmove.
However they were soon joined by a host of other companies providing pretty much the same service. Not out of benevolence, but because it was hugely profitable.
By creating an easily accessible place to see everything currently available to buy or rent, at any time of the day or night, they disrupted the way in which we searched for property.
In doing so they ensured that agents were left with very little choice but to list their clients properties on these websites, and at great expense too.
It’s the reason that a US private equity firm paid 3 billion dollars for Zoopla in 2018.
Whilst these portals still dominate the marketplace, agency 3.0 has seen the rise of the social media savvy agent.
Content creators, digital marketers, and platforms ranging from Facebook to TikTok.
In a world where big tech has convinced us that our next customer might come from any of these places, we’ve been busy bending ourselves into pretzels trying to be everywhere.
The use of these platforms has become ubiquitous, and the content homogenous. To the point that these days, I’m not sure that everywhere is much better than nowhere.
Agents themselves are changing too. For many years it was roughly divided between the larger, corporate firms and the smaller independently owned and managed ones.
Then came buyer representation, which was a real force for good. Helpful if you’re cash rich and time poor. Even more helpful if you need someone to give you actual advice when buying a home.
And thanks to our friends from across the pond, we now have the brokerage model, where individuals can keep up to 100% of the fees generated.
The marketplace is becoming very fragmented. When everyone is saying “you can trust me” it’s getting harder to work out who’s actually deserving of it.
Of course this is less of a problem for the big brands, because they’ve been around for so long that there’s a certain status to be obtained from working with them.
“People like us use estate agents like (insert name of 125 year old company here)”
However, with a changing workforce and an ever growing number of employees placing their autonomy ahead of almost everything else, it’s not clear that the best individuals will want to work in structured, hierarchical environments forever.
Whilst who will emerge victorious from web 3.0 isn’t yet obvious, I wouldn’t bet against Zuckerberg. Although, there’s no doubt he’s got a fight on his hands, not least from his old friends the Winklevoss twins.
What’s equally interesting to me, is what agency 4.0 will look like. I guess we’ll have to wait and see.
A REIT, or Real Estate Investment Trust is a company that owns or finances income producing real estate across a range of property sectors.
So organisations like Land Securities, British Land and Derwent London buy, sell and operate property across different classes. Like offices, logistics and residential.
And now you can invest in the world’s first virtual REIT.
This is definitely NOT an investment recommendation.
But if you do make a lot of money, my commission is 10%.
Things I’ve been inspired by this week
This podcast, which was the inspiration behind today’s blog. I understood about 40% of it. It’s long, but really interesting.
“What the smartest people do on the weekends is what everyone else will do during the week in ten years.”
“Denying and pushing back against NFTs and crypto is basically saying: ‘We’re not going to have a collectively owned future. We’re going to have a corporate-owned future, and we’re going to have a government-owned future.'”