If you're starting an online PropTech business, one critical lesson is clear, your startup must focus on generating profits from day one. This means your pricing should ensure that revenue from the minimum number of viable clients covers all your regular monthly expenses, and reaching this client base should be achievable within a few months (not years) of launching. Based on my own experience, this is a crucial factor in building a sustainable and competitive business in such a rapidly evolving industry.

The Importance of Profitability from the Start.
When building a PropTech startup, your business model must be designed to generate profits immediately, no matter how small the profits. Many startups fall into the trap of waiting years to make money, thinking that growth and scale should come first. This is a dangerous path, as it can leave you vulnerable to new competitors who might offer similar technology or services for free.

For example, Flipkart, an e-commerce giant in India, faced intense competition from Amazon, which entered the Indian market five years later. Amazon's rapid growth pushed Flipkart to its limits. The lesson? Profitability early on is crucial because new entrants may challenge your position, offering services at scale and cutting into your market share.

Navigating Competition in PropTech.
In PropTech, competition can emerge quickly, especially from larger, well-funded companies. If you've been making profits from the beginning, you'll be in a much better position to weather the competition storm.

Based on my own experience, I have come to understand that loyal customers who contribute to your profits can act as a crucial buffer, ensuring that even as bigger players enter the market, you have a solid foundation to hold on to as the competition storm hits you from all directions.

These early profits help you stay agile while meeting you operational expenses and adapt quickly to market changes without relying heavily on external funding.

 

In the early stages of my real estate startup, the Real Estate Database (RED), I encountered intense competition from larger, better-funded platforms such as Lamudi, Estate Online, Jumia Deals, OLX, and Jumia House, along with smaller players like Brokco and Bulooka App. Despite their substantial financial backing, many of these competitors either went out of business or became nearly invisible in the market.

 

Their significant investments were not recoverable in the short term, and because they didn't have the patience or business model to sustain them for the long term, they failed to realize any meaningful returns on their investments. This highlights the importance of balancing early profitability with long-term vision in building a sustainable startup.

Scale Your Business According to Your Profits.
One of the biggest mistakes new PropTech startups make is scaling too fast, too soon. If you're operating on limited capital, your focus should be on scaling according to the profits you make. Start small, address customer pain points, and gradually expand as your profits grow.

Going all in with large operational investments right away can be risky, especially in the PropTech sector, where customer needs and market dynamics are constantly changing. Slow and steady scaling allows you to discover the nuances that will shape your success over time.

Learning from Competitors' Mistakes.
As the PropTech space grows, new competitors will come in, often misjudging the market. Some of these larger players will have significant resources, but their lack of understanding of the local market can lead to costly mistakes.

I once assumed that hiring real estate professionals to run my listings platform would be a wise move, thinking their industry knowledge would be beneficial. However, I learned from a competitor's mistake that this can lead to a conflict of interest, as those professionals could privately compete with your clients. The lesson here is to learn from competitors' mistakes and adapt quickly.

Size of the Real Estate Market.

The real estate market in Uganda and Africa in general, while growing, remains relatively small, and many new PropTech startups tend to overestimate its size and potential. These startups often misjudge critical factors, such as the willingness and ability of real estate agents and brokers to adapt to technology in their day-to-day operations. They also frequently overestimate the amounts real estate agents are willing or able to pay for tech solutions.

Having spent considerable time in the Ugandan real estate market, I've gained a clear understanding of the price points that would deter the average agent from subscribing to a service. If a PropTech startup's operational costs or initial capital injection exceed the revenue potential from the maximum number of viable clients willing to pay within this market, the business is unlikely to survive.

In a market that remains relatively small, particularly in terms of technology adoption and agent budgets, it is essential for startups to design cost-efficient solutions that align with local realities

Handling Unconventional Business Tactics.
New players may also engage in aggressive and sometimes unorthodox tactics, like offering free or heavily discounted services to capture market share. In the PropTech space, such moves can disrupt customer behavior, making it harder for established businesses to compete.

However, you don't have to match these aggressive tactics. Instead, focus on retaining the loyal customers who value the services you provide. Consistent profits from a loyal base will keep you afloat, even as the market shifts.

The Power of a Unique Feature in PropTech.
To stay competitive, your PropTech startup must offer at least one unique feature that differentiates you from the rest. Whether it's an AI-driven property management tool, an intuitive platform for virtual property tours, or a blockchain-based transaction system, you need something that no other competitor offers.

This unique feature should also be part of a larger package of services that work together seamlessly. For instance, a PropTech platform that combines AI-based property valuation with a payment gateway for seamless transactions would offer a unique service combo that competitors would struggle to replicate.

Conclusion.
The PropTech industry is dynamic and competitive, but your startup's survival hinges on generating profits from day one. A profit-first model not only helps you build a sustainable business but also prepares you for future competition. Scale gradually based on the profits you make, learn from competitors' mistakes, and offer a unique, irreplaceable feature to stand out in the crowded market. By following these principles, your PropTech startup can thrive in the fast-moving world of real estate technology.