If there is one metric the VC community seems obsessed about, it is probably growth. In fact, at times it seems that everything is measured with the famous “X” – 2x growth, 5x conversion, or the much coveted 10x, which is simply referred to as an “order of magnitude.” 

This is, of course, very much understandable. When you start a business with a small team and a big idea, competing against incumbents that have 100x (there we go again) your resources, it is only natural that you want to catch up as fast as possible. After all, we can think of incumbents and fintech startups as being in a race: startups are trying to get to get to scale before the incumbents figure out how to deliver digitally native, intuitive, and seamless user experiences.

But one thing that sometimes gets forgotten in this quest growth is that not all of it is created equal – there is such a thing as sustainable and unsustainable growth. In fact, nature offers us a lot of interesting parallels here given that most living things are in a life and death race for existence, and all things being equal, natural organisms, much like startups, are trying their best to grow exponentially at the early stages of their existence.

Consider for example early embryonic development. Once a zygote is formed, an eight week long embryonic development process starts, with the cells in the zygote doubling (that’s exponential growth for you), until a fetus is formed eight weeks later. If all goes well, this process then continues with the fetus developing further, until a baby human is born around 40 weeks after the zygote is first formed! The cell division that underpins this process is of course very much sustainable, according to a grand plan, and one that all of us have experienced though we certainly cannot remember it. 

Now consider a much less pleasant topic, and hopefully one that nobody reading this will ever have to experience – malign growth of tumors. In the early stages of tumor growth, cells also divide exponentially, creating two daughter cells each time. This, however, is very much an unsustainable form of growth, which if left untreated leads to the collapse and breakdown of its host environment, the human body. 

The analogy for startups is that you certainly want to make sure that your growth is of the sustainable kind, and one which will result in a fully developed and independent organism at the end of the journey, and not one that is at odds with the environment in which you exist.

The key to achieving this is complex, and involves several aspects, from human resources to finance, and from product to technology. We will touch upon two particularly crucial ones here, sustainable unit economics and the right human resource infrastructure. 

First, let us consider the business model and finance side. If your growth is not underpinned by solid unit economics, you can grow, but will forever be at the mercy of what can be very fickle capital markets. Yes, funds may want to come and invest in you in one round after the other as long as you are delivering your “X”s, but if you cannot manage to solve the simple equation of “revenues minus costs is greater than zero” eventually, you will never be able to control your own destiny.

In fact, back in the early days of scaling Capital One, we used to say one sometimes has to “go slow to go fast.” This referred to the fact that we would conduct tests on certain segments of the population, and then wait for as long as twelve to eighteen months for that data vintage to mature so we could get an accurate read of the risk characteristics of that segment. However, once a particular segment was proven, we would go from a test on two thousand customers to a full roll out on millions of customers overnight. That was going slow so that we could later go fast, and it was all about having a plan and about sustainability.

In fact, many of our UK investments have also utilized this very framework: ClearScore spent its very early days perfecting its model and assumptions, and once the team saw the path to sustainable unit economics, they scaled from a standing start to ten million customers in little over a couple of years. Similarly, Capitalise who is positioned as the super platform in the SME space, first fine-tuned its unit economic model, which then enabled it to not only survive the shock and dislocation of Covid in the SME space, but in fact come out of it stronger, with more customers and exponential growth in revenues. 

The second and equally important element of sustainable growth is on the human resource side of the equation. Setting up the infrastructure for hiring the right kind of people is of paramount importance, and never as easy as it looks from the outside. To use one last saying from the early Capital One days, we were “not in the consumer finance business, but in the people hiring business.” The whole organization at Capital One, from the first year analyst to the division VP, all spent a very significant part of their time recruiting, scouring college campuses for talent. 

And hiring is not just an exercise in throwing bodies at a new opportunity – it has to be done in a very deliberate and thoughtful manner, making sure the right people get allocated the right roles. Diversity is of paramount importance here, and as I touched upon in a prior blog, more diverse organizations also make for more resilient organizations. Sometimes surviving an unexpected but existential crisis is even more important than growth, and the kinds of organizations that have been able to cultivate an environment where people from very different backgrounds can flourish are much more likely to demonstrate such resilience. 

Growth is essential, but it has to be balanced with a solid master plan and a sustainable model for it to fulfill its true purpose: creating new businesses and industries that exist in balance with their environment. 

Real estate is one of those unique asset classes that has various forms of appeal to almost everybody. When you get right down to it, real estate appeals to our deepest rooted instincts of shelter, security and community. In an evolutionary sense, it even transcends our mammalian roots and gets deep down into our reptilian brain. 

It is no coincidence that Abraham Harold Maslow (20th century American psychologist famous for framing a hierarchy of needs for psychological health predicated on fulfilling innate human desires) put shelter right at the bottom of his pyramid, right above fundamental physiological needs such as breathing, water, food and sex. 

While real estate has such fundamental appeal to humans, real estate investing takes this desire for safety and builds on it with complicated terms like gross yield, net yield, return on investment, and leverage to name just a bit of the jargon that usually goes along with real estate investing. So yes, as we start investing in real estate we transcend the reptilian brain, and start engaging our frontal lobe with cash flow projections and predictions around which country or which city will see rental incomes rise.  

In this context, it is no surprise that real estate is the single biggest asset class in the world. Just to take the UK as an example (otherwise the numbers simply get too big!) UK residential real estate is an asset class of GBP 7.4 trillion. Buy to let investing (where landlords buy property for renting, also knows as BTL) equates to a “small” subset of GBP 1.4 trillion. Just to put this in context, the FTSE all-share index (in effect the value of all publicly traded companies in UK, many of which are international and operate globally) is GBP 2.4 trillion and the value of all loans outstanding to UK SMEs (Small and Medium Sized Enterprises) is about GBP 0.18 trillion, or 180 billion.

But while real estate is big, and appeals to both our analytic and primal instincts, it is one of the least liquid asset classes out there. One can trade shares on the FTSE in a a matter of milliseconds, exchanging ownership in AstraZeneca with ownership in Unilever in an instant. Business loans can be traded in a matter of hours. However, trading real estate can take months in the UK. So ironically, the biggest asset class is also the one that is least liquid.

This is exactly where GetGround and companies like them operating at the intersection of Fintech and Proptech come into the picture. There is no intrinsic reason why trading real estate should take months – in fact, many of the constraints that slow down this process, which at times can be outright frustrating, can be solved with technology. And this is exactly what GetGround does: turning the currently slow and arduous process of owning and investing in real estate into one that is smooth, simple, and secure.

At its core, GetGround enables its customers to buy, incorporate, bank, fund, and manage their property with just a few clicks of their mouse. Let’s now examine each of these five steps in more detail, and why each one is so important.

First and foremost, the process of buying property involves tons of documents, legal agreements, searches, negotiations, etc. We will examine what GetGround does in more detail on the buying side in a future blog, but suffice it to say that the process just asks for standardization, and with its technology driven approach GetGround can standardize all these documents giving confidence to all parties that are involved in the transaction. More importantly, as GetGround is positioned in the centre of the ecosystem, there are tons of so called network effects where GetGround can leverage its central position to help its customers buy their desired property.

Secondly, and this is one of the platform’s core features, GetGround helps landlords incorporate a company that holds their property. Many of us take companies for granted as something that has always been part of human life, but as Yuval Noah Harari states so elegantly in his book Sapiens, companies are nothing more than a shared fiction that humans all subscribe to. But while companies may be nothing more than a creation of our collective imagination, they have very real financial benefits in real life. When applied to properties, these benefits include more efficient tax structures, better inheritance planning, better governance, and more standardized and easily exchangeable ownership structures to name just a few. Hence, GetGround has built a product (including direct API connections to the UK Companies House) that enables their customers to incorporate a company with a few clicks, and put their property into this company, all with automatically generated, customized, and standardized legal documents. 

The third benefit follows logically from the first two: Once a landlord has bought a property and put it inside their newly incorporated company, it only makes sense to open a bank or e-money account dedicated to that company and property for collecting all the rental income into one dedicated place. This makes it very easy for the landlord to track all their rental payments affiliated with one company in one place, which in turn makes things like tax filing and expense tracking much easier.  

Funding the property is then the fourth area where GetGround helps, and it does so by connecting its landlords to all the various banks and lenders that are looking to deploy their balance sheets to fund these properties with specialized BTL mortgages. BTL mortgages are one of the fastest growing segments in the UK mortgage market, and GetGround creates the ideal platform where lenders and landlords can meet. From the landlord’s perspective, they have just acquired a property and they appreciate the introduction to lenders, whereas from the bank’s perspective, the standardized documents and e-money account GetGround provides makes everything more standardized and secure, all accessible in one centralized platform. 

Finally, in terms of managing the property, there are tons of needs ranging from furniture removal to renovation that need to take place, along with financial management needs such as tax filing. GetGround is in an ideal position to connect its customers to the experts that are needed in each different situation. 

When all is said and done, step by step and click by click, GetGround is digitizing and simplifying the process of owning property, taking us all closer to that utopia where we can buy and sell property in a matter of minutes and hours instead of weeks and months. This is the power of technology and data connectivity applied to one of the oldest and most primal industries known to humans, and it is a real privilege to be part of this epic transformation.