Here are two kinds of people in the world – those who’ll run from a threat and those who’ll take it as a challenge. I guess I’m the latter,” says Justin Clarke, executive chairman of Private Property, the company that changed the face of the real estate industry in South Africa forever.
The challenge he’s referring to dates back to the company’s early days. The launch of a new way of selling real estate in 1999 sent jitters throughout the industry. There was a fast closing of ranks by real estate heavyweights and systematic attempts to shut Private Property down.
“I think they were very threatened. We used very aggressive ambush marketing with slogans like ‘You must be crazy to pay commission.’ They really hated that,” remembers Clarke.
What had got everyone hot under the collar was the fact that Private Property effectively removed the need for an estate agent. The company took a small upfront fee of between R3 000 and R5 000 and provided the seller with a national platform to advertise the sale of their house, putting buyers and sellers in direct contact with each other through a website and SMS system.
Estate agents suddenly saw their 6% commission fee (which, as anyone who has sold a house will tell you, can be a considerable chunk of money) being threatened. For a while, the fight got dirty. “It was especially bad in Port Elizabeth – 26 different estate agencies got together in one room and effectively tried to throw us out of the area,” he recalls.
“They threatened our sponsors – NBS was one of them – and they warned the marketing people at NBS that they would boycott them in the Eastern Cape if they continued to advertise and support us. One of the leading conveyancing attorneys had to take his branding off our website because his business was immediately boycotted.”
Several complaints were lodged with the Estate Agency Affairs Board but, as Clarke points out, “They couldn’t touch us. We’re not estate agents. We’re advertisers – just like the newspapers advertise the sale of property. We don’t sell the house, the seller does. We just allow them to advertise it.” Complaints to the Advertising Standards Authority were also overruled.
Looking back on that time, Clarke says, “I think it just made me more determined to make the thing work. I thought that what the industry was doing was wrong – they were trying to prevent a direct market from developing and that’s fundamentally wrong.
So I just thought, ‘Now I am going to make it happen, no matter what.’ It strengthened my resolve.”Clarke has had to dig deep and stick to his guns on more than one occasion and his fighting spirit crops up repeatedly in Private Property’s story.
It’s a story that starts in the late 90s, as Clarke relates. “A friend of mine, Paul Fourie, had registered the Private Property URL and together with some other guys was struggling to get the thing off the ground. There wasn’t really a business at all at that stage and I think the reason they couldn’t get it to work was that it was just too early for the market.
I eventually bought out one of the guys, registered the cc in 1999 and by 2000 all the original people had left.”
Clarke paid R120 000 for the business, a sum he describes as “way too much at the time” but what he’d seen had sparked an interest in him. “I thought it was fantastic. My initial interest in it though was as a property developer, which is what I was doing at the time.
I thought it would be a great way to database buyers because if you want to supply housing, it’s all about knowing who and where the buyers are. So I thought it had incredible potential,” he relates. And although his original focus was on property development, he wasn’t wrong about where the potential lay.
Putting residential buyers and sellers in direct contact with each other turned out to be a simple but potent way of selling real estate. And the key to it all was the Internet, a medium that Clarke never lost faith in, even through the dot.bomb.
“After the crash, what emerged over time was the fundamental belief that as long as you were introducing a buyer to a seller and saving them both a whole lot of money, the thing would have to be successful eventually,” he says.
But that’s not to say there weren’t difficulties. When the company launched, very few people had the Internet. “I remember going to do our first property listings. We’d arrive and I’d haul out one of those old Mavika digital cameras – the ones where you put the stiffy disk into the slot in the side – and people would say, ‘What’s that?’ and I’d have to explain that it was this thing called a digital camera and that we were going to use it to take a photo of their house and then list their property on the Internet.
And they’d say ‘What’s the Internet?’ So you’d try to explain that some people have computers at home and that these are all connected via the telephone line and that people would be able to go via the telephone line to see their property on the computer,” says Clarke.
“For most people, the idea was just too far-fetched.” The obvious solution lay in consumer education but here Clarke faced an uphill battle. Not only did the company lack the huge marketing budget needed to launch a national consumer education campaign, but, as he explains, the purse strings for the mass media in property advertising are held by real estate agencies.
“You have to consider that all the revenue for a property publication is coming from the estate agents’ camp. In fact, the Saturday Star property section belongs to the real estate industry (you’ll notice there’s nothing about us in there) so you can’t get into a property publication if you take an anti-estate agent stance.”
Undeterred and with fighting spirit still intact, Clarke set his mind to finding a creative solution. It came in the form of a deal with a local radio station, as he relates, “Back in 1999, East Coast Radio was building a website using a web developer who was also building our website in exchange for shares in the business.
We proposed an idea that would develop an extra line of business for them, drive listeners to their website and get our properties and contact details out there. We would load our properties on their website, which they could white-label as East Coast Property, and they would drive their users to the listings. We would then give them a share of the revenue generated from the property sales.”
The idea worked like a charm; East Coast Radio had the ability to talk to 600 000 listeners, a public that Private Property was desperate to reach but couldn’t afford to. Even though their brand wasn’t used it was a way of getting their name – and more importantly, their business concept – out there.
And it drove customers directly to the business because the radio station quoted the company’s telephone number. Kagiso Media, which owned East Coast Radio, got really excited about the idea. “We were dealing with Omar Essack at the time – now executive director of broadcasting at Kagiso – and the idea worked so well that we took it to the other Kagiso local radio stations,” remembers Clarke. Similar deals followed with Jacaranda, Algoa, O-FM and K-FM. It turned out to be the tipping point for the company. “We were suddenly all over the place – each time we’d get a new radio station deal, we’d go to that area and set up franchises,” say Clarke.
There was a second factor, however, that together with the radio stations, contributed to the development of Private Property’s franchise network. During the interest rate hikes of the 90s, banks were sitting with thousands of repossessed properties, or properties in possession (PIPs), on their books.
Ever the opportunist, Clarke went to them with a proposal, negotiating to list their PIPs on Private Property’s website. However, there was one small problem, as he explains, “They said they’d give us a try to see how quickly we could sell the PIPs but they gave us properties from all over the country, and we didn’t have a country-wide network of franchises at the time.
So we ran around phoning friends and almost begging them to take franchises. We literally gave the first franchises away!” After that, the company joined the Franchise Association of South Africa (FASA) and attended the FASA Franchise Exhibition.
Clarke sat back and watched, fascinated, as crowd after crowd of prospective franchisees visited the stand. It was clear that word had finally got around.
Choosing the right people to run the company’s franchise network became the next big challenge. “This business is all about people,” says Clarke, adding, “We had to find people who were passionate about the direct channel, about introducing buyers and sellers.
We needed franchisees who believed in the concept of the business and felt passionate about the fact that it’s consumer-friendly.” Today the company has 30 franchises. As the numbers grew, Clarke recognised the need for training.
“We keep learning more and more about the importance of training,” he says, “In the beginning, we didn’t really train anyone. We told them how the system worked and sent them out there. But as the business develops you want to make sure that a consultant going out in Pofadder is the same as one going out to sell properties on the Atlantic Seaboard in Cape Town. We learned that you have to make sure that people deliver the same recipe, and that’s what our training involves.”
As the business has grown, it has advanced technologically. “One of the things I’m most proud of having achieved is the development of some world-class technology – simply because we had to,” says Clarke. One of the latest advancements capitalises on the increasingly mobile nature of Internet connections, specifically through cell phone technology.
“People can now click on a link via the SMS that we send them and view photographs of particular properties on their cell phones,” he says. He also makes reference to a new mapping technology, but won’t divulge any of the details.
“It’s still in the process of being developed,” he says. Over time, Clarke has taken a back seat in the business, leaving the day-to-day management to trusted CEO, Justinus Adriaanse. “I interfere where needed and get involved in the new developments, the exciting things,” he smiles.
This has been a deliberate move on his part. “I believe that the whole task of building a business is about finding people who do a better job than you can. I’m not specifically good at anything but I know how to encourage other people who are good to get involved and expand their capacity to do the job well,” he explains.
They’re humble words, especially considering what Clarke has achieved. Looking back on it all, he remains philosophical. “The great thing about being young and naive in business is that you look at a door and don’t think about it being locked.
You just run into it – to see if you’ll be able to break through. You might fall over a couple of times, but if you keep trying, you might just get through eventually,” he says. The door he found himself breaking through changed the face of real estate in South Africa forever, and is testament to the fact that no one can stop the march of progress.
Private Property OPA
(Online Publishing Association) net ratings per month
- 194 000 unique users
- 6,75 million page impressions
- Users return 450 000 times
- 17th biggest publisher of Internet content in the country
Clarke’s advice to aspirant entrepreneurs
The quicker you realise that you are not going to be good at everything in business, the better; no one is ever going to be good at everything. You need to surround yourself with people who are great at what they do and make up for what you aren’t good at. The faster you can replace yourself, the faster you can grow.
I was a terrible student and never finished my degree so I’m technically uneducated. But you should never let this hinder you. You can always learn through experience and it can turn out to be a positive thing. For me, it meant I never learnt where the parameters were supposed to be; I just went for everything.
The one thing that is an absolutely fundamental truth is that your mind is the only limiting factor to any business venture that you try. If you can believe it, you can achieve it.