Oamen: Competition Very Healthy in Proptech Space
CutStruct Technology Chief Executive Officer and Cofounder, John Oamen, in this interview with This Week In Tech, Oamen speaks about the digitalisation of the proptech sector and the role LiveVend is playing in Nigeria’s construction market. Excerpts:
You recently launched Nigeria’s first construction and real estate construction app, LiveVend. What is it about?
With technology products, your first minimum viable product (MVP) is mostly trash. Then in testing for construction, construction life cycles are 12, 14, 18 months, 24 months. It is not like the fintech product that you can test in three days, so we have been out there for three years. We started out focusing on B2C, price discovery. We have also been tracking the price of construction materials since inception, maybe about three to four months in and that was publishing for free, ensuring that people no longer have to be cheated by their painter, plumber, or whoever they called when they wanted to buy stuff because they just didn’t know.
Prior to now, if someone wants to paint a room or remodel her space. She called a guy, negotiated, and sometimes thanked the person for the little discount given because there was really no source of truth where you would find his prices. So, we started by tracking those prices, publishing them for free, and we were looking to set up a marketplace like Jumia but specifically for construction. During COVID-19, we realised people became a bit more conscious of their spending as nobody knew where the world was going but what we also realised was that unwittingly, the B2B side of construction flourished.
Dangote sold more cement in Covid year than he did the year prior. We were locked down for about six months essentially, so we thought about it as a business that if you wanted to survive, you’re going to have to pivot, move our focus from B2C to B2B. So, what we did was that we used that period to build an MVP, for procurement and construction companies. We’re blessed to have a few construction companies test with us. They paid so it was a paid test which we used for about 14 months. After that, we learnt a lot of lessons, realised how sort of crappy that platform was, and then we started fundraising.
The combination of the fundraising round is what was announced. Recently. What we did was that from the first check we got, we started building the platform which we launched on the 14th of November. We have currently onboarded over 184 construction companies.
What is the difference between CutStruct and LiveVend?
I’ll want you to look at it like Apple and Iphone. In our case, CutStruct is a company and the product under it is LiveVend. As a company, we started building the platform immediately. The reason we separated it is because, tomorrow we might want to go into logistics and not want to call it LiveVend but ‘live logistics’, which will be another product and want to call it ‘live logistics’. It will be another product under CutStruct.
CutStruct was coined from cutting costs in construction costs with the use of technology. So, the name cutstruct technology means that we set out to reduce the inefficiency in construction and reduce costs in construction with the use of technology.
What gap were you trying to bridge when you launched LiveVend?
I will say opacity in price and like I said, people not being able to know what the prices of construction materials are and the inefficiencies in the process of procurement. For instance, if people want to buy material and you want to find the right price, you have to call like 10 different people to compare their prices or terms, which can be inefficient. Issues like goods having problems in transit and who to put the blame on? These are lapses we try to cover.
For us, we wanted to bring transparency and efficiency, that’s the gap and the problem. Eighty per cent of construction projects are recorded to go over budget. Eighty per cent of the time construction projects will go over budget and over time, it’s because of things like this.
Why are proptechs lagging behind fintechs in the technology space?
One of the reasons is that there’s a lack of trust in that space and people don’t necessarily trust technology. They feel it is manual, this is how we do it and do not trust technology. The other thing is, it is a complex space. So, technology alone cannot solve the problem there. It requires deep insight into the industry from people who know the industry. It is not everybody that can do proptech because you need to understand technology to even be able to think of how to build solutions around there. What I predict is that with the successes of companies like ours, Spleet, small technologies estate intel, there will be an upspring of a lot more prop tech businesses and adoption will sort of increase because people will want to try it.
Trust is built and earned by having little wins. The fact that we now have two proptech companies that have raised seed rounds in millions of dollars and are able to do more,can either make or break us. I also think that will give rise to other proptechs that are coming behind. Today, there are so many fintechs because the first few fintechs succeeded and that’s how any market opens. Somebody gets in there, is the first mover, succeeds and it becomes more attractive, more people now begin to jump in, then you have a flow. We now have investors asking us for other proptech companies that we can recommend because they are now looking in that space. I predict that in the new year, there’ll be a lot more raises, businesses in proptech, even people like us will start to have competition. Honestly, I think it is very healthy for the space to have competition.
How do you vet vendors on your platform?
We have a verification partner, Verify me. They help us verify basic things like CAC registration, address verification, the goods these people sell, the volume of the goods that they sell, and the quality of the goods that they sell. So, we know all our vendors and we do this periodically, just so that when people move, we’re able to pick up on it quickly. We’re also talking to top tier vendors, vendors who are self-acclaimed, we are sure that we’re bringing the right crop of vendors to our buyers, and we’re enabling them to have safe transactions.
With the incessant fluctuation in forex in Nigeria, how has it impacted business in the proptech sector?
Well, I think it has brought to bear more than ever before the need for efficiency and I think part of the successes we recorded are really because people are now looking for solutions more. There are factors that they can do nothing about, like inflation and price change in dollar. If you’re a real estate developer, you can do nothing about the dollar rates, but what you can do is make sure that every dollar counts, every Naira you spend counts at being more efficient. In a sense, it has impacted our business positively even though it’s not necessarily a positive thing. Three to five years ago, if I was talking about LiveVend, developers wouldn’t have taken me seriously, things were moving, people didn’t mind the waste.
But now, people are beginning to seek measures to be more efficient to make sure they’re getting value for money. Also, with prices changing, people need to be able to see the impact. So, you had a plan to build a house, and this was going to cost you N100 million. At that time, cement was N3500 per bag. How do you know the new cost when cement becomes N5000. You need a platform that can show you what the cost to complete it changes to and Cost to complete (CTC) is a construction term. A platform that can show you your CTC as prices changes, helps you to be agile, especially if you’re selling this property. If you need to review pricing for your buyers, you’re clear on what you are dealing with.
With the increasing rate of cybercrime in Nigeria, what would you say about the adoption of cyber security in Nigeria? Is there anything we can do better as a country?
The global cybersecurity risks are becoming higher everyday. Due to increase in sophistication of attacks, companies must continuously find ways to prevent themselves from cyber attacks. A major impact of cyberattack on startups is on a company’s reputation. We have seen people/corporates who sue companies that have exposed their data to cyber criminals.
In Nigeria, National Information Technology Development Agency (NITDA) oversees cybersecurity and data protection, and it has established regulations and guidelines requiring organisations that process personal data to be secure in collecting, processing, and storage of that data, and to perform data security audits annually. In May, barely days after launching in Nigeria, MoMo Payment Service Bank suffered a breach that led to $53 million in losses. Some worst cases have not been reported officially.
In mitigating these attacks, we should ensure that all services deployed on the internet are running on the latest versions of the services that they are deployed on. This is because these services make routine updates to cover identified threats and if you do not update, it makes you vulnerable to that threat.
Also, if you cannot afford to hire a cyber security expert in your organisation, have a routine cyber security assessment done on all your systems at specific intervals. Always ensure that staff is trained on how to identify cyber threats and how to report them. To avoid run in with the regulators, always ensure that you are working with the cyber security regulations needed by your host country.
What would you say your greatest challenge has been so far?
I think it is the fact that real estate is typically a laggard asset class. It is typically the last to adopt anything much less technology. People are stuck in the old ways even when they see a solution. They are used to doing things a certain way and there is a lot of fraud going on in the system. Those people sort of push back against us because they feel like our system is going to bring transparency, there is also some level of gatekeeping. Our platform brings about transparency and efficiency.
In a nutshell, our biggest challenges are the old mindsets and the gatekeepers who want to continue running their covert operations.