Fancy OWNING a piece of prime REAL ESTATE for less than a hundred bucks? Meet the man behind the disruptive start-up that’s helping Aussies ENTER the property MARKET, one brick at a time.
the founder of brickx is changing the real estate game for less than a hundred bucks
Property is probably more important to Australians than their religion.” So says Anthony Millet, CEO of the fin-tech firm BrickX. And he’s not just being controversial – he’s done his homework. But first, a little background. At eight years old, UK-born Anthony started working in his family’s sports supply store in London. “I’d say that was the foundation of my entrepreneurial spirit and motivation,” he smiles. After university and four years as an investment banker, with a focus on the technology sector, Anthony surprised everyone by rejoining the family business, Activinstinct, and setting up its online presence to complement the high street store. It was a case of the prodigal son returning. The next five years saw the business emerge as a huge global online sports retailer, increasing annual turnovers of AU$1 million to more than AU$70 million, and expanding into eight countries before selling at the end of 2013 to UK retailer JD Sports.
After a year of travelling, mentoring and investing in start-ups, Anthony planned to take it easy, and “maybe do the VC thing” when he arrived in Australia in 2015. Turns out, Anthony isn’t the type to sit still. “I had ants in my pants,” he laughs. “I’m too ambitious and too entrepreneurial to just sit back and invest in other people’s businesses. I really wanted to grow something, and grow something of value.”
So he plunged into a furious and thorough investigation. “In the first three months I had over 90 meetings with businesses, investors and industry professionals, [to] really try and understand the Australian start-up scene, the Australian business scene, [and] what Australians cared about.”
Which brings us back to property. While much has been made about Australia’s housing affordability crisis, Anthony says the reality is “a lot of the world has an affordability crisis when it comes to property”.
“But, in Australia, there are a few facts that are quite startling. Sixtyfive per cent of this nation’s wealth is in residential property. And that market is worth AU$6.2 trillion dollars. That’s three and a half times the value of the ASX [Australian Securities Exchange]. When you see how much of this nation’s wealth is in residential property, you start to think, ‘Okay, there’s an affordability issue but, actually, it’s not really in this nation’s interests for property to become more affordable, because 65 per cent of this nation’s wealth is going to be going backwards.’”
Enter BrickX. Anthony had been talking to Tank Stream Labs venture partner Markus Kahlbetzer, an investor in Amaysim and Airtasker and co-founder
I’m too AMBITIOUS and too ENTREPRENEURIAL to just sit back and INVEST in other people’s BUSINESSES.
of BrickX, for about a year before deciding he wanted to do something radically different in the property finance sector, like Markus.
“BrickX fit perfectly into that area I was looking for,” says Anthony. So he joined as CEO in April 2016.
“[BrickX] was born out of the fact that of all the residential property that exists, there are no financial products that allow you to invest. It was a case of finding how can we essentially make property investable in the same way that you invest in companies on the stock exchange,” says Anthony. >
Here’s how it works: BrickX buys a property, which sits in a trust. That trust is then split into 10,000 shares, called ‘bricks’. If a property is bought for AU$960,000, for example, the price for each brick is about AU$96, with investors allowed to buy up to 5 per cent of any individual property. BrickX, which takes a 1.75 per cent commission on each brick, is responsible for finding tenants. Investors get a monthly return based on the number of bricks they hold.
“We’re never going to replace the need for someone to own their own home and we never want to. But there is so much desire to invest in property beyond owning your own home.”
BrickX investors vote to dis/continue the investments every five years, and can sell at any time if 50 per cent agree, while individuals can sell their bricks to others online at any point in time.
Finding the BrickX solution took AU$3.5 million in investment and two and a half years from concept to launch, a year and a half of which was spent working with ASIC to come up with the right structure. “Australia is one of the most regulated financial environments globally, with ASIC having a core focus on investor protection and suitability,” explains Anthony. “We presented our idea at a time when ASIC were starting to make great noises around supporting fin-techs and new initiatives, and worked closely with the regulator to find creative and innovative solutions which accommodated the BrickX business model.”
He cites investors being able to sell their ‘bricks’ on a digital platform as one of the most significant breakthroughs they made with ASIC. He admits that the process was gruelling (“living that day to day is pretty hellish”) and, if the product didn’t pass ASIC approval, well, there was no business at all. Anthony says “keeping team morale high” was a battle during these regulatory challenges. “For two years we were building this product, but we weren’t able to market it or put it out there.”
After operating in beta mode since 2015 – but only for high-net-worth individuals and sophisticated investors due to financial regulations – eventually they got the green light for a retail licence. After celebrating the first customer “that wasn’t a friend or a family member”, the company started to hit its stride. Six months after launching in late 2016, BrickX has close to 3000 investors who have invested well over AU$5 million. More than 50 per cent of their customers are Millennials and over 70 per cent of them have never invested in or owned property before.
Given their client base, Anthony is aware of BrickX’s responsibility. “We have a huge role in terms of education, explaining how property investment works, but also in general
We’re NEVER going to REPLACE the need for someone to OWN their own HOME and we never WANT to.
financial literacy and transparency. Let’s be groundbreakingly transparent so that people trust us and understand us and know what they’re getting into.
“We’re in an environment where a lot of people have been burnt by property spruikers. We have no competition, which is pretty critical and vital, but then we’re often compared to off-the-plan developments and all these kind of high-risk projects.” BrickX combat this by educating customers through blogs, email campaigns, and their site, which Anthony says is written in “plain English”.
“There’s no doubt our product is cool,” says Anthony. “It’s innovative, it’s different, it’s disruptive. But it’s not just all of those things. It’s actually providing a real benefit to investors and actually solving a problem that exists.”
While the company has struck that balance now, Anthony admits it was something they didn’t get right straight away. “Early on, [we] were focusing too much on building a really cool product and not focusing enough on why people would want to use it. We’re now getting much better at trying to relate the use of our product to people’s individual needs. For that first home saver it’s like, ‘Look, now you can actually get a foot in the door and save your deposit in line with the market’, whereas previously we’d have just said, ‘Hey, now you can invest in property.’”
Focusing on making the product “consumer-centric” is now deeply ingrained throughout the entire business. “When we make decisions it’s, ‘How is this going to benefit the customer and how can we show the customer that this decision is benefiting them?’”
It’s an approach Anthony recommends for all start-ups. “Make sure what you’re trying to do is not just cool, but actually solves a particular issue. It’s all well and good building cool products but if you can’t work out why someone’s going to use it or how it’s going to make their life better, you’re going to come across those hurdles and you’re not going to get over them.
“Focus on what you’re trying to solve and make sure it’s a real thing. And if it’s a real thing, then every barrier that gets in the way, just smash through it and keep going.”
WHEN we make DECISIONS it’s, ‘HOW is this going to BENEFIT the customer and HOW can we SHOW the customer that this decision is BENEFITING them?’