Real estate’s disruptive influencer
New Zealand’s traditional commission-based real estate sales model has been challenged in recent years by Tall Poppy – a popular ‘lower flat-fee’ disrupter.
New Zealand’s traditional commission-based real estate sales model has been challenged in recent years by a popular ‘lower flat-fee’ disrupter. Kapiti-based Tall Poppy is the original leader of the pack.
It’s a well-known fact that the success of any disruptive business model largely comes down to timing, an offering that resonates with customers, and a burning desire by the business’s owners to make it succeed. In recent years real estate company Tall Poppy has ticked all those boxes.
Launched in 2012 by original founder and now director David Graves, Tall Poppy was subsequently joined by two new directors three years later: namely Michael Seymour – whose credentials include setting up the Radius Pharmacy franchise group – and Sam McIntyre, the very first Tall Poppy agent David employed and first franchise owner.
Sam bought into the vision David had for a game-changing ‘flat-fee’ real estate agency, and came on board just prior to launch.
Today the business has four directors. Mike DelPrete, now based in the US, was the last to come on board. A former tech entrepreneur, CEO, and head of strategy for Trademe, Mike brought with him vast experience in building, investing in and growing new businesses, as well as significant knowledge of the international real estate industry.
With such a broad base of skills heading the company, it’s hardly surprising that the business has grown so fast – particularly in the past three years.
Sam remembers when he bought into the business, aged just 28. Tall Poppy was virtually a one-man operation back then, and not exactly equipped with the infrastructure for rapid growth. He remembers they intentionally dialled back the business (he calls it “oiling the engine”) in order to prepare for the next phase of development.
It’s fair to say that the genesis for Tall Poppy happened when David Graves first entered the real estate industry 20 years ago, explains Sam. “He saw how wrong it all was. He was never comfortable with the traditional fees – the fact that companies were taking half, or more, of what agents were charging; even though the agents were doing the majority of the work. And the fact that, particularly when houses sell quickly, it’s a lot of money for such a short service.
“Tall Poppy was born out of fairness to sellers and agents,” says Sam. “Born out of what customers want, not what we want, or the industry wants.
Disruption happens when the current level of service in an industry doesn’t meet the needs and wants of people, he explains.
As Tall Poppy’s very first agent, operating in the Kapiti Coast, Sam’s had a box-seat on Tall Poppy’s progress since day one. The concept was quickly successful in that initial region and subsequently others, he says – places like Upper Hutt, Palmerston North and Nelson – fuelled by more private sellers entering the market and growing resentment towards traditional agents and their perceived flashy lifestyles. But it required a lot of hard work on his part, he recalls, as well as earning trust and changing mindsets. However, he says the results soon spoke for themselves. They developed “a whole bunch of raving fans” – “people who appreciated having a market alternative”, and he was blown away by the level of support and encouragement in taking on the establishment.
Tackling the major metropolitan cities like Auckland will come down to timing, a “big war chest” and a whole lot time. Sam believes the boom times in Auckland especially, when homeowners were realising hundreds of thousands of dollars more for their properties at auction than expected, did take the focus away from the size of agents’ fees.
But with the current market downturn, he believes that will change and he’s excited about the opportunities. In any downturn he’s predicting a bigger market share for Tall Poppy and other emerging fixed-fee players, along with sellers becoming more fee conscious.
2018 was a big year for Tall Poppy – growing to 18 franchisees and around 140 people; rolling out across the South Island, and doubling sales revenue. Being the first, and now largest, of its kind in the market, the business is in a good position to cope with any general market downturn.
The brand now covers most of New Zealand – Auckland and Northland the obvious exceptions. But by 2020 the goal is to have those on-board too, and Sam believes growth will keep happening through continuous improvement and regular adjustments.
He also believes that the logic of Tall Poppy’s ‘one office’ business model overcomes any perception that the service level is inferior to that of traditional ‘High Street’ agents.
“We still charge a full fee, there’s no discounting. It’s simply lower because we operate with far less overheads.”
At the end of the day, fees are just part of the equation – people will choose the agency that delivers the best result, he says – adding that agents, too, are flocking to Tall Poppy because there is the potential to earn more from less transactions. “And there’re no office dramas.”
He estimates they’ve saved Kiwi homeowners $30 million in agent’s fees since launching Tall Poppy. “That doesn’t take into account how much other [traditional] agencies are discounting their fees now that we’re in the same market.”
Going forward, and with a three-layered marketing approach (head office, franchisee, sales agent), growth does seem inevitable for Tall Poppy. Sam says the goal is to cover New Zealand; then look at related subsidiaries such as property management, which would operate out of the Kapiti headquarters.
Tips for young players
Sam reminds other entrepreneurs in his age group that nothing comes easy in business. “There’re many 20-hour days and 90-hour weeks that go into an overnight success, and that was me for a solid two years.”
His advice to younger people is to play the long game, and, like he did, “have a burning desire to make the business work and a belief that it will be successful, even if others tell you that you’ll fail. “You also need to genuinely love what you do.”
Sam tells NZBusiness that he’d probably still be putting in those long hours if it wasn’t for his three children under five.
“So, my advice? Now’s a good time – build your business now before you have other commitments.”
Age is no barrier, he adds. “In fact it can be a real advantage.”
Written by Glenn Baker, editor of NZBusiness.