Simplifying the path to home ownership in the Philippines
The Finishers: Learn First-hand from the Philippine Founders Who Willed Their Startup from Idea to Exit was written by Ezra Ferraz in 2017. This book documents the stories of 11 local founders who were able to scale their startup and exit. This excerpt, titled “Simplifying the path to home ownership in the Philippines,” which focuses on the journey of MyProperty.ph and its founder, Butz de Castro.
A tale of two boards
Throughout the 2000s, real estate in the Philippines boomed, as anyone with two eyes and a view of the Metro Manila skyline could see, but one question remained ignored, to the extent it was raised at all: How do Filipino property seekers navigate this increasingly vast number of developments to find the right home?
There was pretty much only one online option. “Back then, it was really just Sulit,” said Butz de Castro, who had observed the rise of the horizontal classifieds from the sidelines. Founded in 2006 by RJ and Arianne David, Sulit was the go-to choice for both property seekers and real estate professionals, along with Filipinos looking to buy or sell in just about any other category you could think of, from electronics and gym equipment to clothes and pet accessories (the first new item ever posted on the site was a bird cage).
Even in another field—Butz was now the business development and operations manager for a company that specialized in records management and people relocation, after spending most of his career in enterprise sales—he could see that Sulit was taking away market share from print classifieds, such as Manila Bulletin, which were getting thinner by the week.
During his second year in this role, Butz met Lisa Gokongwei-Cheng, the president of Summit Media, who confided to him that she was going to create a different kind of online classifieds with Swiss media group Ringier AG as partner. If Sulit was a horizontal platform, carrying listings in several dozen categories, their classifieds would be a vertical one, gunning after one category and one category alone: real estate.
By focusing on a single category, their vertical classifieds could provide value-added features for home buyers, real estate professionals, and property developers that a horizontal one—by virtue of its breadth—would have a harder time doing, or simply not want to do, as it would divert them away from the utilitarian goal of serving the greatest amount of goods to the greatest amount of people. American real estate platform, Zillow, for example, had a tool that enabled homeowners to valuate their home based on market data, and a directory where property seekers could find the right home inspector (Craigslist, if you can guess, did not have such features).
There was other value in focus. Users would not search “for rent + Makati” and stumble upon listings for food carts or photo booths that were available for lease in the city. You wanted a home —you got homes. It was a simple formula that Ringier AG had replicated to great success in their own country, central Europe, and even Vietnam.
When Lisa told Butz she was seeking someone to head this joint venture, he applied and interviewed for the position. The prospect of building a real estate classifieds with the combined resources of a national and an international media giant was too enticing for him to pass up.
On paper, Butz did not appear to be the best candidate. For one, he had no background in real estate. Nor had he ever managed a website. Why on earth, then, would anyone, let alone Lisa Gokongwei-Cheng, believe he could lead a real estate website?
To Butz’s surprise, Lisa offered him the role, knotting the bow on his compensation package with billing as a managing director, as the person building the classifieds from the ground up.
After some rumination, Butz understood why she had made the offer. That the product revolved around real estate content was only incidental. “What you’re really doing is selling the medium,” said Butz, who had handled every type of sales function up to the executive level. He would have to sell Filipinos on the advantage of searching through this vertical classifieds, and sell brokers and developers on the importance of listing and advertising there.
Butz knew this task would not be easy. “The tricky part would be striking a balance between a product that talks to property seekers and one that talks to property sellers,” he said.
He incorporated the joint venture soon thereafter. On official documents, the company was GetSold. Butz understood the joint venture structure of GetSold would have disadvantages, even for him. “I now had two presidents and two boards to report to. I would be beholden to both sides,” he said, pointing out he would have to manage upward, a skill which business books and classes do not teach enough.
After finishing the business plan that the two boards had started (and without incident, promisingly), Butz set up office at the headquarters of Summit Media at Robinsons Cybergate 3 in Mandaluyong City. He brainstormed for a public name for GetSold, one which conveyed, in a single breath, what it did. Anyone who has ever named a business will understand the struggle Butz went through. Everything that came to mind seemed too something. Too forgetable. Too literal. Too unclear. Too formal. Too informal. Too literal. Too long. Too short. Too unpronounceable.
The worst case would be to rush into a name, which stuck with a firm forever. You could rebrand your logo, your colors, and your identity, but never what people called you and the associations—or lack thereof—they got from it. In the case of Lamudi, a competitor backed by Rocket Internet that emerged in the Philippines in 2014, Butz lamented it was the latter. “Talk to a broker. It’s hard for them to embrace Lamudi. In the first place, what does ‘Lamudi’ even mean?” he asked.
The public name for GetSold that Butz finally landed upon was far more direct. In an office where he shared the halls with the likes of Forbes Magazine, FHM, Entrepreneur, Cosmopolitan, and Esquire, Butz would dedicate the next few years of his life to convincing property seekers to throw out the print classifieds and X out other online platforms, in order to look for their home at MyProperty.ph.
While the Summit portfolio may have put immense pressure on Butz to succeed, the company’s shared services—accounting, administration, and human resources—enabled him to hit the ground running.
He hired his first team members in July 2010, and together they flew to Vietnam on a fact-finding mission. Their subject was Mua Ban Nha Dat, Ringier AG’s real estate classifieds, which had become a market leader in the space. The company name translated as “Buy and Sell Real Estate,” and this string of words had as much search engine cache in Vietnamese as it did English.
For the duration of the trip, Butz listened to the local executives share best practices on building a real estate classifieds, across all the domains that such a complex business involved, for example sales, operations, digital marketing, and the user experience.
As part of Butz’s deep dive into the classifieds space, the Buy and Sell Real Estate executives supplied the answer to the chicken-or-the-egg problem. Once MyProperty.ph reached a critical mass of listings, property seekers were bound to buy or lease from at least some of the
brokers who posted them, and word would spread across the industry that they were nabbing clients through MyProperty.ph (the one thing brokers looked for more than the next client was an edge).
A network effect would kick in: More brokers would list properties, and more netizens would click to MyProperty.ph in search of their home rental or purchase, attracting still more brokers to the site once they did. MyProperty.ph would grow through this virtuous cycle, and Butz could stand in the middle, selling to the swirl. To brokers, who already found the site improving their sales, he could offer additional products, such as a paid subscription that equipped them with premium listing and customer relationship management features. To developers, who appreciated the increased visibility of their properties, he could upsell ads to net them even more eyeballs. MyProperty.ph was a gold mine, and all Butz needed to do was wait at its entrance, selling pickaxes to those who wanted in.
Beneath the philosophical underpinnings of a classifieds site, the Buy and Sell Real Estate executives left no room for ambiguity. They told Butz the exact number of unique listings MyProperty. ph should have at launch. The operative word there was unique.
“What good is it if there are thousands of listings, if you see a property over and over? It’s sold by you, me, and a bunch of other brokers. It’s a bad user experience. The same properties should not repeat again and again,” said Butz, who banned brokers from posting a property that was already represented on the site by someone else.
With support from Buy and Sell Real Estate’s development team, Butz put together a skeletal version of the MyProperty.ph website. Even with no track record, convincing some of the 12,000 brokers in the country to market their properties on MyProperty.ph was not difficult—most were
already doing so on other websites, classifieds, social media platforms, and apps (some operated sales channels on Viber). MyProperty.ph for them was just one more way to expand the net they cast on the web.
While MyProperty.ph now had listings, they were the same listings as everyone else—hardly a compelling case to get users to switch over from their preferred brand to an untested one. Butz thus assembled what he referred to as a listings force, who he deployed across Metro Manila to gather information on properties brokered by agents who had no affinity for the internet. After returning from the field, they transformed the data—the photos they took, the facts they noted, the descriptions they wrote—into unique listings.
Butz launched MyProperty.ph to the public in September 2010, making it the first real estate classifieds in the Philippines. The initial version of MyProperty.ph was a near carbon copy of Buy and Sell Real Estate. The differences were topical at best. MyProperty.ph’s content and blog was in English rather than Vietnamese, its default currency was set to the peso rather than the dong, and the property listings were mostly of Metro Manila rather than Ho Chi Minh. While some might chide Butz for not taking greater risks with the blank slate Summit Media and Ringier AG had handed to him, the quick imitation was part of a larger strategy.
“Ready, fire, aim,” Butz said of his approach, inverting the traditional mindset of businesses who would think it prudent to set a target before launching. “We get the listings in quantity, then we learn.”
From Google search data, he already knew that Filipinos were searching far more for homes and condominiums than warehouses and office space. Traffic to MyProperty.ph, which was largely earned through co-marketing activities with other Summit titles with similar demographics, such as Men’s Health, gave Butz the hard numbers. 5% of searches were commercial, 95% were for residential.
Curiously, most home hunters were looking for pre-selling properties, some which would not be ready for move in for several years. Though there was precious information to go by, these property seeker made do with what they had, carefully studying the sample floor plans,
examining the artist’s renderings of the building and its interiors, and poring over the photos of the model units. It was a classic case of information asymmetry: buyers had to make a decision based on whatever limited details the developer chose to release. Butz could not think of a comparable situation (imagine trying to buy a $20,000 car based off a three-inch matchbox version of the vehicle).
Butz’s realization for why buyers were so willing to bear the paucity of information was at once both inspiring and overwhelming for the new managing director of a real estate classifieds: MyProperty.ph, for them, was the first touchpoint on the dream of home ownership.
In the shadow of Sulit
Even as the creator of MyProperty.ph, Butz held no doubts about the company’s position in the classifieds space: They were the underdog, and the leader was unmistakable.
“Sulit had the traffic, Sulit had the brand recall, and Sulit had the deep pockets to pour into marketing and advertising,” Butz said.
Sulit was also beating everyone, not just classifieds, or even commerce sites. In a well-publicized coup, Sulit had topped Inquirer.net, the online portal of one of the longest-standing broadsheets in the Philippines, in local traffic. Much like Ashton Kutcher and CNN’s race to reach 1 million followers on Twitter which the former That ‘70s Show actor won, Sulit’s victory captured the zeitgeist of the Philippines circa 2010: more Filipinos were increasingly interested in the peer economy, as both buyers and sellers.
As a certified cultural force, all Butz could do was keep a close eye on Sulit.
“In early 2011, we knew that Sulit knew that the other way to go was to put up vertical classifieds. That’s when they launched the tab for Sulit cars, under the mother brand. About six months later, they already had Sulit real estate,” Butz said.
While Sulit real estate was not a vertical classifieds, the section organized the platform’s mass of property listings into a single area, making it easier for users to search through them. The section, then, was a direct threat to MyProperty.ph’s value proposition: Why bother going to a
separate real estate site to look for a home, if Sulit, the site you probably used to search for everything else, already had the property listings organized for you right there?
To deal with such challenges, Butz needed a level of agility MyProperty.ph did not have. With MyProperty.ph sharing Buy and Sell Real Estate’s development team out of Vietnam, even a simple request to the website, due to the time difference and language barrier, took exceedingly long to process, much less complete.
Though Ringier offered additional support from its tech teams in Switzerland and Macedonia, Butz declined as the time difference with those countries would have even been more troublesome. He instead appealed to both boards for a local tech team. He argued that it would be cheaper, and that the company could move faster. Such a request was unprecedented; part of the reason development took so long was because all of Ringier AG’s classifieds coursed their needs through Buy and Sell Real Estate but they granted Butz his Filipino developers. Instead of having to fall in line to implement changes to MyProperty.ph, he could just walk over to their workstations and ask.
While MyProperty.ph was constantly evolving—there would be four major versions over Butz’s tenure, in addition to the day-to-day iterations—the pitch he gave brokers stayed the same. “These are how many visitors MyProperty has, each of them is going to X number of listings, and this is how many inquiries you can expect,” he said.
Finding salespeople who could effectively replicate this pitch to brokers was difficult. For even if Butz felt that MyProperty.ph was funda- mentally different from horizontal classifieds, brokers still inevitably compared the two. The shadow of Sulit, in particular, loomed large over every sales meeting. In this context, brokers were hesitant to pay for a subscription to MyProperty.ph when posting was free on Sulit and seemed to be going just fine for them. How does the average salesperson respond to that?
Over its lifetime, MyProperty.ph became a revolving door for sales people. Butz experimented with every possible demographic for his sales team, from fresh grads to mid-career people to senior executives “When I saw that my sales team was not performing, I would hire, fire, hire,
fire. Sometimes I would fire but not find more people to replace them,” he said.
Beginning in early 2012, he picked up the slack by attending every real estate meetup, event, and conference in Manila. When he was not at the MyProperty.ph office, he was networking among attendees, trying to corral brokers back to his office. And when there were no events to attend, Butz pitched his own, volunteering to give talks on digital marketing to brokers associations during their monthly meetups.
Using figures from Google and Nielsen, he also documented the migration of property seekers from the print classifieds to the online world. When brokers gravitated to him after the presentation, he offered them a free trial of a paid subscription to MyProperty.ph. Nearly all took
him on his offer and converted to paying customers later on. The close of a sale would be a cause for celebration for most businesses, but not so in the case of a digital platform like MyProperty.ph. For as soon as the sales cycle finished, the arguably more tedious process of broker education began.
Most brokers, for example, did not have a professional photo to upload to their MyProperty.ph profile and were content to use whatever file happened to be on their desktop. So when a homebuyer found a home he was interested in and checked to see which broker was representing it, he would often be greeted by a photo of someone downing a flaming liquor shot at a bar. Or someone locking lips with what was hopefully his significant other. Or someone half-naked at the beach, in a glistening two piece. For many MyProperty.ph visitors, this would be the broker’s first impression, and understandably, their last.
“In terms of number, it’s more difficult to cover brokers,” Butz said. “And in terms of education, they are the most stubborn.”
Brokers yielded when pushed. Butz’s quality assurance (QA) team brought up the issue of unprofessional profile photos to errant brokers as tactfully as possible. If someone is making the most important buying decision of their adult life, you want to convey trust any way you can, even in a picture. While the brokers suited and dolled up for proper headshots, Butz knew this kind of reactive education would not scale. “Once we see an issue, the pressure to find the next one is even higher,” he said.
In time, Butz enlisted the aid of developers, who MyProperty.ph always had more stable and easygoing relationships with, in part because they already had budgets earmarked for advertising on sites like theirs.
“They were the ones we could ask for help in terms of telling the agents, ‘Hey, listen to MyProperty.ph. They’re trying to educate you. Be educated!’” Butz said.
In November 2012, MyProperty.ph hosted what would be the first and last Real Estate Awards, both to thank developers for advertising their platform, along with evangelizing to brokers on their behalf. Held in a ballroom at the Oakwood Joy-Nostalg Center Manila, Butz appointed a panel of judges who doled out awards in everything from best website to highest sales.
But even with the backing of developers, Butz could only do so much for brokers. Digitizing and promoting their listings was already difficult in of itself, and to professionalize all of them on top of that was next to impossible.
Some issues were so bizarre that the QA team members were rightfully puzzled on where to even begin with the errant broker. In one instance, the broker superimposed a different bible verse on every property picture he uploaded to his listing’s gallery. The exterior of the house had a verse from Genesis, the living room had one from Matthew, and the kitchen had a message from Revelation. Imagine the property seeker’s plight as he tried to examine the design of the master bedroom buried underneath the following type: “Blessed is the one who reads the words of this prophecy aloud, and blessed are those who hear and obey the things written in it, because the time is near!”
Even in hindsight, Butz could only shake his head in disbelief at the photo preachings. “That became a trend,” he said.
On the back of a Rocket
When MyProperty.ph had launched in September 2010, the company stood alone as the country’s only real estate classifieds. The problem with being a leader is that others follow. Just four years later, Butz found himself in a crowded marketplace, jostling shoulder-to-shoulder for position. These competitors were not two-man startups, either. These real estate classifieds were full-scale operations backed by deep-pocketed corporate parents and venture capitalists, all eager to hold firm on their bet in the space.
Butz did not have to labor much for information on them. As in the case of Sulit, brokers and developers referred to this new crop of competitors throughout the sales process.
There was RealEstate.ph, which was founded by Chris Janukulovski, who had built one of the most successful BPO companies in the Philippines just seven years earlier; brokerage firm Housing Interactive threw its weight behind Hoppler, which maintained an in-house staff of licensed brokers; Property24 was backed by Naspers, the same group behind unquestioned market leader Sulit; and Lamudi Philippines was funded by the multibillion dollar coffers of Rocket Internet, which sought to rule the world outside Silicon Valley.
Online real estate in 2014 was a battle of giants. Unfortunately for MyProperty.ph, both Summit Media and Ringier AG had lost the will to fight. Ringier AG wanted to turn their attention to other more promising emerging markets, like South Africa. Lisa wanted Summit to focus more resources on the digital titles under their exclusive ownership.
“Their attitude was ‘let’s explore,’” Butz said. They weren’t exactly putting MyProperty.ph on the auction block, but they were walking it toward the front to see who in the crowd might stand up for a closer look.
The three divided up their exploratory search. Ringier AG canvassed for a potential buyer in Europe, Summit Media took charge of Southeast Asia, and Butz covered the Philippines. The meetings each se were driven by no real sense of urgency.
“If nothing happened, we would have continued running MyProperty.ph. We would have fought it out,” Butz said, which may sound like posturing until you break down their numbers at the time—on the developer side alone, MyProperty.ph had business development deals with over 200 companies, including 50 of the major ones like Ayala Land and SMDC, as well as about 150 small and medium-scale firms.
Because of their business-as-usual stance, the trio presumably had greater leverage when they introduced MyProperty.ph to the prospective buyer across the boardroom table. But no one appeared interested, at least on Butz’s side.
He had first approached local developers. Butz’s thinking was that with MyProperty.ph in their portfolio, a forward-thinking developer would win no matter what—if a property seeker bought from them, then great, and if a property seeker bought from someone else, then still great,
as those competitors had to pay them fees to advertise through their platform.
Developers like Ayala and Filinvest didn’t see it how Butz did. In their view, a classifieds site like MyProperty.ph would pull them away from their core competencies. Selling real estate was very different from selling a medium for real estate, and developers were unwilling to make the leap. Their hesitation was rooted partly in vanity: They did not want to be responsible for marketing their properties alongside their competitors.
“That was their general stance: ‘I don’t want a business model like that,’” Butz said.
Butz also presented to the owners of local buy-and-sell sites. While he generated more interest from them, Butz’s asking price for MyProperty.ph was too steep. As he rued his luck—sales was his expertise, yet here he was, unable to find a single serious lead—there was a flurry of interest in MyProperty.ph an ocean and two continents away, unbeknownst to him at the time.
Robin Lingg of Ringier AG, flew from Switzerland to the Berlin headquarters of Rocket Internet, which had just pumped 18 million dollars into Lamudi with several partners, earmarking the capital for expansion in Latin America, and rejoice, Asia.
While Rocket Internet’s digital playbook was well known, even to a digital giant like Ringier AG—it took proven online business models in the west and replicated them to other markets—its end game was less so. After scaling a business in a particular country or region, Rocket Internet’s founding trio of brothers, Oliver, Marc, and Alexander Samwer, often turned around and tried to sell it to the very company they copied the original idea from. No matter how friendly this pitch was presented, it was hostile at its heart: Either you buy us, or you brace yourself for a costly
battle for market share in this area.
Even with their arm twisted, many innovators swallowed their pride and chose the first option. In an early example, group buying platform Groupon bought the Rocket Internet imitator CityDeal for an estimated price tag of more than 100 million dollars in May 2010. In explaining the decision, GroupOn CEO Andrew Mason wrote that the Samwer brothers had elevated the practice of cloning American business models in Europe into an art form, before concluding that the Rocket Internet and CityDeal management were some of the best operators he had ever met.
“It was no wonder they’d become #1 in every one of their countries—in only five months, they’d even become larger than the largest Groupon knockoff in the U.S. It’s absolutely insane how quickly they’ve scaled, with 600 employees working from 80+ European cities, and already saving their customers over $5 million in April alone—their fourth month of operation,” he wrote.
Other companies were less enthusiastic about Rocket Internet’s offers, such as accommodations platform Airbnb. When Rocket Internet suggested that Airbnb buy Wimdu, which not only copied Airbnb’s business model but scraped their listings and poached their hosts, CEO Brian Chesky sought advice from all the heavyweights in his network during what he called a “bet the company” moment. For if Airbnb could not wrest control of Europe, the company’s future was in jeopardy.
Y Combinator founder and Airbnb investor Paul Graham provided Chesky a paradigm that split the business world into two. The founders and backers of Widmu were mercenaries, or people motivated by money. The Airbnb team, in contrast, were missionaries, or people motivated by a higher calling, in their case, the need to help people “belong anywhere” through the sharing economy. In Graham’s view, missionaries always beat mercenaries on the playing field, as they were willing to do anything to see their company succeed, just as Chesky and his co-founders had sold $30,000 worth of Obama O’s and Cap’n McCain’s to keep Airbnb afloat in the run-up to the 2008 presidential election. Chesky rejected Rocket Internet’s offer over the phone to a mostly silent Oliver Samwer.
From the perspective of the group behind MyProperty.ph at least, Rocket Internet was probably closer to skilled operator than ruthless mercenary, and so they set up a second meeting for November 2014 at Shangri-La, a five-star hotel in Makati, this time between Butz, Lisa, and
Kian Moini, Lamudi’s global head. Lisa requested Butz to do the talking, as she knew little of the day-to-day operations. “‘You’ll be the one to sell,’ she told me,” Butz recalled.
At the meeting, Butz asked Kian what his goals were with an acquisition. If Lamudi was going to shut down MyProperty.ph to consolidate the real estate classifieds space in the Philippines, he and Lisa were open to the possibility, but they wanted to know up front.
Butz’s preference was to see MyProperty.ph live on, and Kian assured him and Lisa that such would be the case. MyProperty.ph and Lamudi Philippines would co-exist as separate brands in the event of an acquisition, and the synergies between them would only assure further growth.
For the next several hours, Kian asked Butz for a 360 of MyProperty.ph that led him to believe Lamudi was serious about acquiring the company—they were not just window shopping. How was the MyProperty. ph team? What were their pain points? How did they address them? What were the strengths of the brand? How was their relationship with brokers?
Butz took all of these questions, along with the more detailed ones that Lamudi’s expeditionary party would pose over November and December, such as those pertaining to their accounts receivables or sales pipeline, in stride. While he had no experience with mergers and acquisitions, his time at the helm of MyProperty .ph gave him a strong foundation to work from.
“The acquisition came naturally to me because I was handling day-to-day operations. I know the cash situation. I know everything about the business,” Butz said.
The two parties also went back and forth on the asking price until the deal pushed through on March 15, 2015. Butz believed Lamudi bought MyProperty.ph, as opposed to one of the many other real estate websites in the Philippines, because he and his team had built a product that was really viable.
“If you go down to the roots of the operation, we were of substance,” Butz said. While MyProperty.ph was an online platform, it had a real-world impact for hundreds of thousands of people across the industry, helping developers fill their units, brokers close sales, and Filipinos find the right home, many of them their first.
According to Butz, MyProperty.ph had such a deep foothold in the local real estate market that its branding could have even taken precedence in a full merger. “It’s safe to say, an option could have been to merge Lamudi Philippines into MyProperty.ph, then dropping the Lamudi name,” he said.
The two companies, of course, have coexisted after the acquisition as separate entities, and Butz has observed their paths as an outsider. After the buyout, he left to found his own consultancy, advising tech firms that also aspire to make a dent in their industry. Butz believes our nation’s tech ecosystem is in its ascendancy, and much like one of the pre-selling high-rises advertised on MyProperty.ph, who are already rendered in their full glory but may have even yet to break ground, there is a certain confidence in our future. “We have nowhere to go but up,” he said.
To learn more from founders like Butz de Castro, please check out the full book, available for purchase here.
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