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I was having a conversation with an entrepreneur recently. She had recently founded a start-up which aimed to integrate a number of “point solutions” so real estate brokers could have several of their needs met on the one platform.

Point solutions have a single use case, and it’s often how a company begins. A building access card (or its predecessor—a key) is an example of a point solution. On the other hand, integrated solutions (or platforms) serve as a central resource for several use cases. Sticking with the access card example, the contactless functionalities in your smartphone that enable the likes of Apple Pay can allow you building access, payments, transport passes and event tickets. Just like in business or academic specialisms, the advantage of a point solution (particularly in the early days) is expertise—being the very best at one specific task. On the other hand, they don’t allow much flexibility and can have limited addressable markets.

What does the real estate sector say?

During recent field research I have been completing on technology deployment in the built world, it seems to me that the customers of PropTech solutions are increasingly weighing up the trade-off between best-in-class point solutions and adaptable integrated solutions. What does this trade-off look like? Well, if a real estate firm budgets and plans for four technology solution deployments annually, and those deployments are of point solutions, only four use cases are addressed that year. Helpful for focus, some might say, but perhaps not as helpful for maximum impact. If those point solutions were wrapped up in a single integrated solution, the innovation manager can spend more time focused on deployment and less time on procurement—presumably increasing the likelihood of the deployment succeeding.

Compete or collaborate?

The challenge facing PropTech is whether to (i) compete with one another (espousing the importance of their specialised use case or building out additional solutions); or (ii) collaborate with one another (mergers or interoperability). A third possibility is an attempted intervention from wider market participants, as many SPACs (special purpose acquisition companies) demonstrated with multi-asset strategies during the 2019-22 boom. Within the Pi Labs portfolio, we have been seeing an increasing level of activity between entrepreneurs in the area of interoperability—with announcements in the pipeline. More widely, we saw M&A activity in global PropTech and construction tech reach a record high in 2021 (253 deals recorded by PitchBook). 2022 recorded the second-highest number at 204.

The role of customers’ pain points

As always, the viability of a specialised point solution in an age of abundant PropTech solutions is proportionate to the pain point it addresses. A time-poor innovation manager, for example, is more likely to sit up in their chair if a point solution provably solves something like energy performance, occupier retention or another issue keeping their CEOs awake at night. This is where integrated solutions could fall behind: is the messaging too complex? It’s one thing to pitch Microsoft Office, everyone gets that. But how does the sales manager of an integrated PropTech solution communicate the benefits of a suite of solutions while holding the attention of their prospective customer? Instead, it seems that vendors would benefit from focusing the conversation on the existing problems.

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