A major backer, which lost all of its £3m investment in Emoov, has said that there simply wasn’t enough cash for the huge amount of marketing needed to make a success of the venture.
He has also revealed that LSL had been on the verge of investing in Emoov but instead switched to Yopa, to the tune of £20m.
Most of all, Emoov could not compete with Purplebricks.
Simon Murdoch, a director of Emoov, said that his vehicle Episode 1 will not look at Emoov as a failure but as “a healthy learning experience”.
Murdoch also defends the business model and management, and the leadership of founder Russell Quirk.
Murdoch says: “In Russell Quirk, Emoov had an excellent CEO who did a great job building the business to become one of the UK’s biggest hybrid estate agents.
“He also hired an impressive C-level team with experience from Just Eat, BookaTable and Groupon.”
Murdoch says: “It wasn’t lack of a great product that caused Emoov to fold. Nor was it strategic or management mistakes. And it certainly wasn’t because the company lacked good leadership.
“So, if it wasn’t any of those things, what did go wrong?”
Murdoch says: “What convinced us at Episode 1 to invest £1m in Emoov back in 2015, followed in subsequent rounds to a total of £3m from us and around £20m from other investors over the years?
“The obvious appeal of operating via an online estate agency platform rather than running a network of physical branches – each with a team of staff – is that it offers opportunities to reduce costs through efficiencies and automation.
“In the conversations we had with Emoov before investing, it was clear that they had, sensibly, identified the value of letting customers deal with human professionals when moving home – something most people do very few times in their lives.
“Instead of being an entirely computerised experience, Emoov had expert estate agents on hand to guide customers through the process. Being centralised in a call centre offered the necessary cost savings but it also made quality control much easier than managing teams distributed across the country.
“Consistency of service is something large branch networks find difficult, so the platform approach makes real sense in this industry while also being a lot cheaper.
“This approach worked – Emoov went on to enjoy great customer satisfaction ratings and was for many months voted the country’s best estate agent for customer experience in 2017 for all agents on and offline by the industry review site allAgents, i.e. best among over 20,000 estate agency branches.”
Murdoch continues: “By this time, though, the market had become incredibly competitive with a wide field of players jostling for dominance.
“Purplebricks had consistently led the field, being well backed by investors including fund manager Neil Woodford and Errol Damelin, the founder of Wonga.
“An IPO that came unexpectedly early in December 2015 raised £25m and valued the company at £240m.
“That made it almost ten times bigger than Emoov’s next biggest player.
“This was far from a two-horse race, with Hatched, Housesimple, Yopa, easyProperty and Tepilo all busily fundraising and looking to grab market share.
“In December last year, Carphone Warehouse founder Charles Dunstone topped up an earlier investment in Housesimple as part of a group putting in a further £20m.
“At around the same time, Toscafund invested £14m into easyProperty.
“Russell Quirk had been incredibly tenacious in seeking further funding for Emoov as well as exploring possible mergers.
“At one point in 2017, LSL Property Services, the UK’s second-largest estate agent network, was on the verge of a deal with eMoov but backed Yopa instead to the tune of £20m.”
Murdoch says that Emoov came unstuck because it did not have enough funds for marketing: “It’s like getting an airliner off the ground. You have to build up a lot of speed on the runway to get airborne.
“That’s hard if you are consistently outgunned by competitors with more cash at their disposal, particularly when there is such a dominant main player like Purplebricks.
“That tends to create a flywheel effect in this situation where the best at fundraising will have more money for marketing, making them the biggest and fastest growing, so best able to raise yet more money, allowing them to pull further away from their competition.
“The money flows up to them, making it harder for the rest of the field to get investment.”
Murdoch concludes: “At Episode 1 we’ve been moving away from straight b2c plays for a while now. We’ve found that even with a £60m fund which equates to around £2-£4m per investee company, that’s just not enough to build a national brand and get the necessary visibility in a highly competitive, purely b2c market.
“It makes much more sense for us to focus on capital efficient business models where more can be achieved with comparatively smaller amounts of investment.
“We now prefer sales driven businesses including marketplaces rather than purely marketing driven businesses, so we don’t look at Emoov as a failure but as a healthy learning experience.”
The full analysis is here:
Comments (31)
Looking at Michael Bruce twitter it looks like PB may step in, wouldn’t want 3000 + upset customers pointing out they had gone down the pay anyway route and wasted a load of money I guess.
As I watch Purplebricks Share Price sliding down again I can’t help but think about the millions upon millions these online companies spend trying to promote that the public want an Online Property Listing Service? …..it’s like trying to convince the public to buy water, because this “New Water” doesn’t contain Water! …….so it’s better?! …..than boring Old Water?! ……then, after the Hype, the consumer realises that Original Old Style Water is what they actually need/ed.
It’s up to us, Local High Street Estate Agents to continue to drive home the message that the Consumer should Trust “real” Estate Agency to deliver on what is most likely their most valuable asset.
There is a place for Online Companies/Business however the collapse of Emoov demonstrates again that “Virtual Estate Agency” only appears to work until the money runs out.
At the coalface across the UK are Independent/small Branch Network Estate Agents delivering for their local markets, and their public are undoubtedly best served by them.
There’s no doubt that we should continue to examine technology/sofware/convenience features that benefit our clients and ourselves however “Service” remains as crucial as ever.
On holiday just now, I’m still looking after my clients, negotiating sales, booking appointments for new instructions etc ….sure, it would be great to completely switch off however any “real” estate agent loves what they do.
In my opinion, Online Only Companies like Purplebricks remain poor imposters of “real” Estate Agents.
Estate Agency in the UK may appear to “under pressure” in some respects however whilst Online Property Listing Companies have successfully proved that they can burn through money like it’s water, they have also demonstrated why High Street/Local Estate Agents serve consumers much better, much more effectively and will be there to serve them next time around.
That children’s classic “Ten Green Bottles” springs to mind – as the callcentre listers crash one by one.
Clearly PB and Yopa are likely to be among the last to fall, but when?
Ironically, the push could come from those nice people at RM as they impose annual increases of 20% plus, and arbitrarily redefine their geographical pricing, in a desperate attempt to maintain their own profit margins !
Must be nice to be able to write £3m off as a learning experience.
Sick and tired of all these excuses these online agents give after having millions thrown at them.
Its completely insulting where on the ground us hard working agents are scrabbling for everything we can to survive by working our arses off rather than taking the sit back and let the money do it approach.
Seriously, this was a learning curve or a healthy learning experience. (are we all from Mars!)!!!!!
Murdoch trying to justify his job as the money put into eMoov was not his but investors!!
Would like to to know which other silly ventures this Murdoch guy has invested in?
Has anyone asked the question;
1. where is the founder of Tepilo, how much did she pocket after the merger (did she bail out), was she still on the payroll of emoov
2. what was Russell Quirk’s full salary package
3. the c- team he bought over, how much was their salary
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When we started, we started with nothing but strong will & determination, a laptop, and the advantage of knowing that the only way was up!
We’ve never asked for investment, we’ve never borrowed a penny, the risk was/is all ours. It used to be called building a business from the ground up, until you became successful enough to give investors or lenders confidence in you, your business and your team.
Modern day mass funding of start-ups based on the words of slick sales people used to be called a confidence trick, but hey if people have money to risk/waste that’s up to them. The internet has opened the door to these (The Apprentice) type non-entrepreneurs who make business look as easy as depositing investors money in their own company accounts.
It works fine as long current investors keep coughing up, or a steady stream of new investors are found. When the bucks stop coming, the buck is passed and onto the next venture!
If Simon Murdock wants to invest £3M in My Estate agency, ill guarantee him £3k return! soo much better than his investment in Emoov. It will definitely be a hands off investment – ill do all the work – keep the £2.97M [Sentence removed as it breached posting rules] and pay him £3k very quickly! Thats a lesson in e business that we can both learn and profit from.
PS – if he blames PB as better equipped to raise money – then that sounds like Emoov management inadequacies was your failure.
Delusional drivel from someone desperate to cover his own tail. I laughed long and hard at the ‘best agent in the UK according to All Agents’ line. If that was a yardstick they used for reassurance the world has truly gone mad!
Can’t help but think the aforementioned statement from Simon Murdoch/Episode 1 is a publicity exercise aimed squarely at shoring up their reputation. In reality Simon, it was a failed investment. By all means dress it up however one would have to consider reading your post analysis as highlighting that you didn’t grasp the situation when you were in the thick if it.
As for Russell Quirk relighting his career? ……..ask his former employees what they think of that as they experience unemployment, ask the investors who listened to his “pitch” ……and of course the dear old customers….who will most likely turn to their local estate agent to dig them out of their emoov hole, whilst feeling that estate agents have let them down when in fact the “Online Only Impersonators” let them down.
According to the Telegraph his morning Russell Quirk could not be reached for comment. What’s up Russ, cat got your tongue. It is a shame you did not maintain silence when you asked your investors to put up some more cash that was just plugging a hole rather than moving the business forward like you said it was?
Changing the subject somewhat, now is the time for all estate agents to up their games and fees in order to survive what is a very turbulent marketplace, with low transaction levels.
Purple bricks have indeed been the big disrupter and I suspect they will survive as there sees to be an appetite for it, although it is very hard to see if any reasonable return on investment will ever arrive. I predict that the rest will fizzle out or be insignificant, particularly if there isn’t any volume in the market.
So I plead to everyone not to follow their competitors to the bottom as in time you will surely go out of business. Up your game, be confident and sell the benefits of your company and yourselves but charge a decent fee. Irrespective of the fact that every EA seems to be saying that they cannot attract business unless they “give their fees away” I am beginning to see that the public are coming around to realise that they need a proper agent and with the value they get from that, on a performance fee basis only, it shouldn’t be that hard to convince them !
HUBRIS | meaning in the Cambridge English Dictionary hubris definition: 1. a way of talking or behaving that is too proud: 2. an extreme and unreasonable feeling of pride and confidence in yourself:
Hubris – Wikipedia In its ancient Greek context, it typically describes behavior that defies the norms of behavior or challenges the gods, and which in turn brings about the downfall, or nemesis, of the perpetrator of hubris. The adjectival form of the noun hubris is “hubristic”.
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£3m vanished into nothing sounds like a decidedly unhealthy learning experience.
Wow. Somebody this stupid shouldn’t be trusted with money. [Sentence removed as it breached posting rules]
“He also hired an impressive C-level team with experience from Just Eat, BookaTable and Groupon.”
And therein Mr Murdoch lies the root of the failure of your investment,
Far as I know, none of those three companies has much of a track record in the successful operation of a national estate agency business.
Just checked Emoov’s Manchester stock, good luck with that if anyone wants to buy that lot up! Over priced to say the least. I feel sorry for the vendors who had their pants taken down by good sales people ( not estate agents ) who persuaded them to part with hard earned cash, and for what ?
sorry must crack on got a business to run and try and get some exchanges through so I can pay the staff. ( that’s how it works yes ? )
Never seen an Emoov “for sale” sign. Only seen a couple of YOPA.
PurpleBricks TV adverts showed they were operating in a different league to the others. The fact that no big names like Virgin started throwing money into the sector showed they weren’t convinced the market was big enough to support 2 main competitors (and that looks to have been the right decision).
PurpleBricks at the last count were in profit in the UK and have dedicated funds for overseas expansion (apart from Oz). Now in the organic growth stage which they say is double figures in terms of instructions and 20% in terms of turnover. My proxy suggesting close to 14% on average in H1 for instruction growth. The question now is how much has marketing and admin. costs grown? Are they still in profit in the UK?
Also, how many of the instructions that would have been heading to Emoov will go their way?
Interesting times.
Have you heard the expression ‘once bitten, twice shy’?
Call in the sfo. [Sentence removed as it breached posting rules]
I will politely disagree with “Murdoch says that Emoov came unstuck because it did not have enough funds for marketing: “It’s like getting an airliner off the ground. You have to build up a lot of speed on the runway to get airborne.”
Estate agency is a service industry with onerous and demanding fiduciary obligations that are clearly laid out in case law. Agents sell people’s most valuable asset; their home. Irrespective of the value of the property the value of ‘Home’ can’t be measured in things like money.
#local agency can not be disrupted by cheap and that is what disruption has set out to do; to undercut service with cheapness that vendors simply don’t want and do not need.
Emoov and it’s investors wasn’t up against Purplebricks it was up against service, reputation, trust, and familiarty. Every For Sale boards shouts REMEMBER US, WE SOLD YOU YOUR HOME. Every Sold board shouts INSTRUCT US WE’RE GOOD, every office shouts WE’RE HERE WHEN YOU NEED US AGAIN.
No money in the world will ever outspend #local
Mindboggling that two ‘people’ can down thumb this comment. #getalife
I think we all know who they are
Who ever believed that because you have buckets of cash, you can be a market leader overnight, without offering the public the service and support they need. For sure PB has pumped millions into profiling. However, it doesn’t offer the public what they need most when moving home, support, guidance and for sellers, the best possible sale price. PB will follow in the flight path of Emoo I suspect, when investors eventually wake up to recognise it’s not a business that can generate the mythical returns suggested. And the reason for that is because the public is slready waking up to recognise that “ on line” is not good for them emotionally or financially
“We now prefer sales driven businesses including marketplaces rather than purely marketing driven”
The arrogance of these people, throw enough money at the marketing, reach scale ( read get enough vendors ) and achieve efficiencies
Sweet Jesus, this job is hard, always has been, you’re managing relationships not squirting widgets
Even now, after the company has gone belly up, they still wont admit where the problems lied. The problems in my opinion is that they didnt have enough knowledge about estate agency and what the customer actually wants.
Emoov was launched years before PB, they had pretty much a free run at it, but didnt offer a good enough service to grow quickly. Then after PB launched and the investors saw the Bruce brothers getting incredibly rich they desperately wanted to launch on the stock market asap as they presumed this was the way to go.
With all respect for the people who joined from Just Eat and Groupon, estate agency is a much longer process and like many business has a uniqueness that people dont understand until they are at the coal face.
Utter tosh. You shouldnt keep throwing millions at something in the hope that someday it will turn a quid.
In July it was announced on Crowdcube by Emoov prior to the fund raise where 600 investors handed over £1.5m this statement
“The newly-enlarged business has SECURED a total of £15m in new funding from existing and new shareholders, as well as an additional investment from Channel 4 with them providing advertising, plus from Northern & Shell, Tepilo’s largest shareholder, via Sky, putting the combined business on track for strong growth this year”
However in an interview in Property Week yesterday he now confirms that wasn’t the case 600 angry investors will now be clamouring for their money back. What on earth did he think he was doing ?
”
Before the merger we had targeted a fundraising of £10m in order to push forward with a float next year,” explained Quirk. “We agreed £5m from one investor, and a further £3m from four other investors. However, the investor that had agreed £5m in exchange for equity changed their offer at the last minute, after it was too late not to push ahead with the merger. Instead, that investor offered a loan of £2.5m on the condition we paid off all our existing debt, interest on the loan, and legal fees. After that, we were left with less than £2m from that investor and the £3m from the other four
So, instead of having to raise just a further £2m, we were suddenly left with a search for a £5m. However, when one investor changes the terms at the last minute like that can send a negative signal to others. Since that moment we’ve struggled to raise the additional cash especially given the negative investor sentiment over Brexit, and the readjustment in values for the online sector.”
In the Negotaiter in August
Emoov says the extra cash raised in its latest campaign will be used to both fund an advertising push, upgrade its online platform and hire more talent.
The £1.152m raised so far today – which is likely to increase in the coming days as it is opened up to more investors – is on top of £6m raised from existing shareholders to finance the purchase of Tepilo and online lettings agency Urban, plus a £9 million equity-for-media deal across Sky and Channel 5.
“IN CONTRAST TO OUR LAST CAMPAIGN WE ALREADY HAVE THE FOUNDATIONS IN PLACE TO PUT OUR SIGHTS ON AN IPO ,” says Emoov CEO Russell Quirk.
“However, we wanted to offer one last opportunity for non-institutional investors to support the enlarged company, and to benefit from the anticipated uplift in value that our continued success is likely to deliver.”
No he didn’t he was still looking to replace the lost investment
It was always going to happen his endless quest for publicity was always going to make him shoot himself in the foot
Finally in his interview yesterday he reveals
As for his own future, Quirk said he had not made any decision about what to do next. “I love this business, so I’m sure I’ll pop up somewhere eventually”, he said.
Time to stick the head below the parapet
hasn’t he already set up a couple of new businesses??
He’s already Tweeting his new PR biz and is popping up on radio.
A bit soon for me, but I suppose there is no time like the present to move into your new venture.
What’s crazy is that these companies feel the need to raise investment like it’s the key metric. You can tell by the way they talk. Instead, they should have focused on delivering a product that actually works… which Emoov never did.
Marketing is easy when you have £20m to throw at obvious channels like TV. Marketing execs get credit for ‘brand awareness’, but really they had £50k to throw at a marketing agency to make an advert.
Looking at Emoov as a ‘success’ by any standard is a joke. They succeeded in raising a load of money, then spending that money. In the process people learned who they were. That’s it really. This has all been an expensive marketing campaign for something that was never going to work.
Also, the excuse of “PurpleBricks was growing faster than us” is feeble. Emoov basically took their eye off the ball, Quirk focused on raising more and more money, pushing his valuation up and up. He feels great about himself as he’s ‘worth more’. The whole time adding valuation to a service that hasn’t got the foundations to support itself. A collapse was inevitable.
Please EYE, don’t give these guys any more airtime.
More closures and administrators to follow with the other FSBO/Pay IT and Forget IT sites.
This is just the start and proves that these setups/PropTech/Virtual isnt working under current market conditions and requires hands on people to deal with sales.
I am assuming the 14 day cooling off period will be exercised by Emoov customers.