Tuesdays on AltSearchEngines we host our Debates, and this week we are pleased to welcome Yannick Laclau of Properazzi and Gary Stewart, CEO of Migoa/Nuroa.  This debate expands upon our earlier interview with Yannik.



1.  Vertical search engines really seem to be taking off, can you just summarize a few of the challenges that are unique to Property/Real Estate Search Engines (as opposed to People Search or Job Search Engines).

There are many challenges, but fundamentally these are the same for search engines in any vertical: finding and adding fresh content; identifying and removing bad content; accounting for duplicate data; processing search queries quickly. If you’ve solved the fundamental problems, then you can apply them to any vertical without too much trouble. Properazzi are already very advanced down this path already in real estate, with technology that indexes 4 million listings from 11,000 different agency websites.

The main challenge for a property search engine is a variation of the general problem faced by many disruptive start-ups: How do you make yourself known and differentiate yourself when there are powerful web 1.0 property incumbents already online? There are obvious differences between property search engines and web 1.0 real estate portals, but how do you convince consumers that they should care? A lot of consumers are already accustomed to behemoth companies like Rightmove in the UK (a listed company with a market cap of more than €1 billion) or Seloger in France (also a listed company with a market cap upwards of €700 million), and these companies have enough money to out-spend us and enough brand recognition to pose a significant entry barrier. In addition, vertical search engines aren’t a particularly viral product like Facebook where customers have an obvious incentive to return every day and share it with all of their friends. 

So getting the customer to the product is the main challenge when there are powerful incumbents with well-established brands who don’t have cutting-edge products but their products are still more-or-less okay for the average Internet user. Once the customer gets to our product, it’s fairly easy for her to understand how a property search engine like nuroa will make her life a lot easier and disrupt her prior real estate search experience. But the main initial challenge is getting her there. Other than that, there are specific problems related to making sure that our results are precise, relevant and exhaustive, which can be a challenge given that the quality of the underlying property web sites in each country are sometimes pretty questionable.

2.  AltSearchEngines has come across seven significant Property Search Engines in your area, and other minor ones. Why such a crowded field? Are you all primarily similar, or fundamentally different?

In the past few years I’ve seen lots of projects in this area, probably motivated by the promise of easy money: just combine real estate (money!) with the Google business model (more money!) with the mashup/search engine template (easy!). So there was economic motivation and a low perceived entry barrier. If anything, I’m surprised there haven’t been many more startups in the field…maybe what’s missing in the mix is some social networking (sexy!)

Vertical search is a good, simple yet intuitive idea that no one was doing it Europe. That companies like News Corp, The New York Times and Sequoia have invested in similar products in the US (and now in Europe) further encourages European entrepreneurs to start similar local projects before the Americans arrive. As for differences among vertical search engines, it all depends on how closely you look. On some level, Google and Yahoo both have search engines, but they are not regarded as the same. Similarly, on a very basic level, we’re all search engines focused on property. But many of us operate in different markets. For example, Globrix is not currently nuroa’s direct competitor. Their market is the UK, and their main competition is in the UK — nuroa is focused currently on Germany and Spain. Each market is a different world with its own rules, home-buying and renting patterns, economic evolution, language, competitors and targets.

Apart from geography, some of us have different objectives. nuroa aims to be profoundly local — Spaniards buying properties in Spain, and Germans buying properties in Germany — whereas Properazzi has a much more international focus and scope from the beginning. On a technical level, we sometimes differ on how we obtain the property ads. Some of us rely more on receiving XML feeds, whereas others focus more on search technology. Then as an empirical matter, there are obviously going to be differences in whose results are more precise and exhaustive with a higher degree of recall, and the breadth and quality of the results will probably be the key differentiator from the consumer’s point of view. And finally, there are “softer” issues like usability and design that also affect the user experience. That being said, I’m pretty sure that we all borrow and learn from one another.

3.  Most of the updates that we receive from your space are larger territories covered, which is natural, but where does it end for you? How much geography do you seek to cover in the end?

The world, of course! Properazzi never made any secret of its ambition to be the platform for the world’s property listings. Since launching in March 2007, Properazzi have been steadily adding new markets, and now cover 50 countries. We’ll continue to add support for further countries in 2008. But geography is not the only axis along which Properazzi are planning to expand near term.

To date, the web 1.0 real estate portals have been quite successful even though they only operate in one geographical market (this goes back to my answer above about whether those of us who currently operate in different markets will necessarily have to compete against one other at some later point). Rightmove’s expansion plan is to cover all of the UK as opposed to just the big cities like London.

For the moment, they’ve felt no need to compete vigorously outside of the UK. Seloger has a similar strategy to increase its penetration in the provinces outside of Paris. As mentioned above, Rightmove has a market cap of more than €1 billion, and Seloger is close with a market cap of more than €700 million. So you can create an interesting business in just one geographical market if you can become the market leader. That being said, our search technology in nuroa is obviously very scalable, so you can easily adapt it to new countries and even to new verticals. As with most things, your limits will depend to some extent on your financing and your ability to execute.

4.  Can you just summarize your business model and how it relates to the financial needs of the real estate agents/brokers, and perhaps even the property searchers and/or sellers?

Our business model is advertising. It’s great for the advertisers because we’re delivering a very high-value audience for much lower cost than they’re used to paying. For property buyers/renters, Properazzi is 100% free, so our model works great for them as well.

We make money via advertising — featured listings, banners, etc. The web 1.0 real estate portals require real estate agents/brokers to pay a set monthly fee to upload a predetermined number of listings regardless of whether the site actually generates leads for the real estate agency. And given that most of these portals only intend to grow within their national boundaries (and some are public companies), the only ways for them to grow are up and out — up, meaning that they will have to raise prices as many have done over the past year, in some cases doubling the prices; and out, meaning out of the big cities where they started and into the more remote provinces within their geographic market.

Nuroa’s model is different — more pay per click than subscription fee: an agency only pays if we send them traffic for a featured listing or some other form of sponsored ad/banner. Agents don’t have to pay us to have their listings show up organically on our site. From the consumers’ perspective, it’s very useful to have all or most of the property ads in nuroa. Classifieds sites are growing like mushrooms as print continues to falter and more traditional media companies move online, and no one has the time or attention span to visit 50 sites to look for her perfect property. A property search engine cuts out all of the unnecessary steps and let’s the user find her dream home in a couple of clicks.

5.  What is your relationship to the major search engines, Google, Yahoo!, et al? Are they your major concern – or are your fellow Property search engines your main rivals for business?

I honestly think it’s too early days to answer this question effectively. As we evolve, it’s just not clear yet who ends up being a partner, a competitor, or simply a “not relevant”. Ask me again in two or three years

Our goal is to supplement not supplant Google and the other major search engines. We don’t really see them as our competition. Google had Google Base for a while, but they don’t really seem to have pushed it very hard. And last year TechCrunch reported that Google was in talks to buy SimplyHired, so obviously that means that, if the reports are true, Google sees the opportunity in vertical search and isn’t opposed to purchasing the market-leader in each vertical. That being said, we didn’t start this company hoping to be bought by Google. Not that we’d be opposed to it on principle, but nuroa’s goal is to become the next Rightmove or the next Seloger. And we see our fellow property search engines within our geographical markets as our most immediate competitors.

6.  How do you market your site – drive users to you as opposed to anywhere else?

We dabble in most of the usual marketing type of activities, but work hardest on developing a great product for users so they can remember and return to our site, and recommend it to their friends.

As mentioned above, this is our main challenge. And we take a variety of approaches to marketing our product, though I’d probably prefer not to explain our strategic marketing plan in any great amount of detail. But I can say that it’s a combination of SEO, SEM and viral marketing.

7.  It’s a tradition to say something complimentary about your debate partner.

Migoa: nice integration of flickr and technorati data, and they chose a great city in which to be based.

In the case of Properazzi, I’d say that we learned a lot from them. They launched before we did and provided a key test case for seeing the market’s reaction and adapting our own strategy before launching. They were also the first European vertical search engine to receive funding from a major European VC, so that served as an inspiration to us.