Getting all the pieces in place for a big tech deal is ridiculously tough, writes Joe Jesuele. You need to have the right mission, leaders, and a solid cultural fit, then make sure you spend your dollars wisely.
Big technology deals seem to fail more often than they succeed. Mergers are hard. Investing venture capital funds in the right firm is a crapshoot.
Even the most well-known and respected brands have mergers that bombed. Think eBay and Skype ($2.6 billion: 2005), Sprint and Nextel ($26 billion: 2015), Google and Motorola ($12.5 billion: 2012), or Microsoft and Nokia ($7 billion: 2013).
VC investors don’t like to be reminded that WeWork was worth 47 unicorns ($47 billion) in 2019, and poof: $42 billion gone, as its value hovers around $3 billion today.
Real estate’s high-profile proptech moves haven’t fared much better. Think RE/MAX and Booj, Realogy and ZipRealty, or Keller Williams telling the world it is transforming into a tech company.
This explains why some people may be skeptical about recent proptech-related deals that others have applauded, such as Zillow and Opendoor, Zillow and ShowingTime, VHT Studios and Matterport, and Flow.
Flow is a new proptech company from the founder of WeWork. Yes, Adam Neumann, who made headlines for wacky behavior at WeWork and eventually resigned. Yet somehow, a company that hasn’t told the world what it does is worth $1 billion before it has even launched.
Dollars count
Making money in proptech is also hard. Most firms focus more on market share and expansion than their net proceeds. Earning a profit seems like a Holy Grail quest for many, even those considered to be their category’s best.
Take Mike DelPrete, a top real estate analyst, who gave a presentation kicking off the latest Inman Connect. He received significant applause from traditional real estate agents and brokers in the audience when displaying slides that showed Zillow Offer’s net losses totaling $1.5 billion, only exceeded by…