[INTERVIEW] Zigbang wants to innovate living spaces with tech
Despite having a very active property market and highly-developed IT infrastructure, Korea has been lagging in terms of development in the real estate business.
Listings have not traditionally been all that transparent, and the rules have made it hard to justify investment in technology.
That’s changing quickly, with 3-D listings becoming standard, and quite advanced in terms of functionality, and other big innovations on the way, including metaverse tours with avatar agents.
A leader in these developments is Zigbang, a company founded a decade ago.
It started as a real estate listing app posting photos of available flats and prices. The service, which was the first of its type in Korea, was a breakthrough at the time when there was hardly any reliable information online on available apartments.
The company had only eight employees back then.
Since then, the company has received seven rounds of funding, with Goldman Sachs as an investor, and has been identified by one government ministry as a “unicorn.”
Zigbang, which has raised 228 billion won ($196 million), claims a valuation of more than $1 billion.
Total monthly users of the Zigbang app and two other real estate-related apps operated by the company is above 10 million, the company says.
Zigbang now wants to expand its service from just listing photos of properties to actively engaging in selling and renting them by forming partnerships with real estate agents and adding various technologies to its app.
Nearly one third of Zigbang's employees are IT developers.
It also is planning to work with home concierge service companies, such as those dedicated to cleaning and refurbishing apartments and exterminating pests.
"Zigbang is a company that innovates the spatial experience through software," Ahn Sung-woo, founder and CEO of Zigbang, said in a recent interview with the Korea JoongAng Daily.
Ahn studied statistics at Seoul National University and worked in accounting, gaming and venture capital. He started Channel Breeze, an e-commerce company, in 2010 and changed its name to Zigbang in 2012.
Ahn has served as the chairman of the Korea Proptech Forum since 2018.
"Until now, hardware was the one and only factor that decided the quality of a house, such as its location and how new it is. But that doesn't need to be the case anymore. As long as you can get all sorts of services, it wouldn't matter how big the house is or where it is.
Taking the idea of “innovating space” further, Zigbang is planning to start a global metaverse platform called Metapolis, which will mainly serve as a remote working tool.
It is being tested now by Zigbang employees.
Zigbang got rid of its headquarters in southern Seoul early this year.
Following are edited excerpts from the interview with Ahn.
Can you explain more about Metapolis?
It is a digital tool for remote working, and it started with the breakout of the coronavirus. We were working remotely, and the company was still running well. Then we thought to ourselves, why did we come to the office all this time? People consider forming relationships with others important at work, but existing tools like Zoom didn’t resolve that. There were entry barriers to these tools, such as setting up a meeting time, inviting people and all that. We tried to get rid of those inconveniences. So in Metapolis, we enabled people to just start talking when their avatars get close to each other just like in real life. I think it has an 80 percent or even 100 percent resemblance to the offline working environment. A total of 300 people can work on the same floor of the building built inside the Metapolis, and 32 people can talk in a group at once. We are sort of making a bet with Metapolis, a bet that network infrastructure will only get better and costs will decrease. As soon as we started using Metapolis within Zigbang, a lot of our employees took off to Jeju Island or elsewhere to live with their families. Metapolis is planning for a global launch this year. Brand registration and all that has been done.
Zigbang was recently said to be a unicorn company. What is your thought on it?
It is just the beginning. Korea’s real estate business is one of the biggest industries in Korea, but its change is comparably slow. There are companies valued at 10 trillion won in other industries, but a unicorn company has just been named here. Foreign countries are sometimes shocked at our real estate system because there has been barely any progress while the country boasts the world’s fastest internet. For example, when I explain about Zigbang’s business, that we provide addresses and photos of the properties on sale, they don’t understand why it is a business in the first place because in their countries such information is a given.
What was the starting point for Zigbang 10 years ago?
The starting point was me trying to find a one-room studio for monthly rent back when I was studying. There were limited sources of information I could get. The process of finding a home is that you visit the real estate agency and disclose your budget. The real estate agents then offer some of the options within the budget and they go to see the place after calling the homeowner. What’s surprising is that the real estate agent is seeing the house for the first time as well you. Their service wasn't better than being a mere guide. I wondered if there could be any other way to check the conditions of the rooms without having to visit the agency and the houses, which is physically aggravating and time consuming.
What was the challenge at the time?
Persuading the homeowners to allow us take the photos. Since Korea’s real estate regulation doesn’t allow an exclusive relationship between a homeowner and a real estate agent, even if we post photos of a house through one agency, another agency next door could end up signing the deal. Then the homeowner would ask why they went through the hassle. After some trial and error, we decided to bluntly lay it out there that we don’t have many users. We did a lot of legwork. As we accumulated data, we came up with a script that would have the best chance of getting approval from the homeowner on taking photos. Once we collected photos of some 150,000 households, we started the marketing work.
Initially, Zigbang focused on one-room studios. Then it expanded to apartments. Can you explain the process?
Right. The service mainly focused on one-room or two-room houses for about the first five years, and we started delving into apartments from 2016. When we expanded the service to apartments, we took a different approach to what we did with studios. With studios, we thought accumulating data and photos should come first, but with apartments, we first thought about what kind of services would lure in the users looking for an apartment to live in instead of collecting photos. Along the way, we acquired HogangNoNo [which provides apartment prices and information about neighborhoods, such as schools].
What kind of services are available for apartment listing?
Potential tenants would wonder about what the view is like for their future home and its surroundings. We set up 3-D visuals for all apartments in the country. The service is even available for apartments that haven’t been built. The construction company discloses basic information about the yet-to-be-built apartments when it seeks tenants at first. We pull all-nighters based on that information to offer a visual of what it would be like when the construction finishes. We use topographical maps and GIS [Geographic Information System] information. Such experiences helped when developing the Metapolis platform.
How did a real estate listing app get into developing a metaverse platform?
When a start-up achieves certain value, it then moves on to making the next value. Zigbang started with one-room studio listings and then to apartments. Now, it wants to change the experience one would have in a living space. Until now, it was the hardware that mostly defined what kind of space it is. But the hardware-focused thinking is becoming obsolete in many industries, including cars, as you can see in Tesla and with smartphones as well. Living spaces can go through the same change. We are preparing a home concierge service where we connect home services that were only available in nice apartments to those who are living elsewhere. For example, we are planning on-demand storage space where people can store unnecessary stuff, such as winter clothes during summer time, which will give them extra 2 pyeong [71.2 square feet] in their houses. It would be useful to those living in small houses. Other home services, such as repair and cleaning, will be available as well. In that sense, we thought about how we could change home experience when working, since working at home has become more common, and ended up developing the Metapolis metaverse working space.
When Zigbang announced a new business model called "On-tact Partners," where Zigbang forms partnership with real estate agents and shares commission fees, it received harsh backlash from the industry for disrupting the market. What are your thoughts on that?
Korea's real estate brokerage market is not consumer-oriented. The reason why there are arguments about lowering the commissions is that people think the fee is expensive compared to service quality the real estate agent is providing. When compared to other countries, commissions in Korea are in fact cheaper just looking at the numbers. Our plan is to help real estate agents do more and rightfully receive the commission fee. Of the 460,000 licensed real estate agents in Korea, only 10 percent of them have their own agencies and are handling apartments. Our tool can help the remaining 90 percent. If we provide the digital tool for better service, I think the real estate market pie can get bigger. Some people might say that buying a house is a different story because it is expensive and going digital may not work. But if you think about it, because a house is so expensive, more information should be provided. We look at multiple reviews and ratings when we are ordering delivery food, but what do we refer to when we want to buy a house? I think I refer to more sources when I am planning a trip than when I am looking for a place to live. My objective is to make such infrastructure.
What are the challenges in making such infrastructure?
Making partnerships, whether with real estate agents or a concierge service company. Last year when we attempted a digital allocation of new apartments, construction companies were reluctant. But there were companies that had made such attempts, and we were able to grow thanks to that. Consumers are already demanding such a service because we are a step late compared to other industries. The supply side has to step up.
What is the future for Korea's real estate market and proptech industry?
I think it has great potential. One of the characteristics of Koreans is that once we get familiar with certain digital service, we absorb it very fast because all the infrastructure such as the fast internet is prepared. From the industry point of view, there is much potential as well in terms of technology. There are hardly any proptech companies overseas that use 3-D technologies in their business. We were able to do it because a majority of our developers have worked at game companies before. Korea with its big gaming industry has an upper hand in that sense.
Which area in proptech is worth taking note of?
There is a field called contech which refers to technology in construction. Technologies weren't that much used when constructing a building or maintaining and repairing them until recently. These days, drones are used to inspect the construction site and collect data required to calculate how much sand is needed to level the ground. VR technology is also used to check if the buildings are being constructed as planned without having to physically visit the site. In the past, inspectors needed to visit the site on a regular basis.
What do you think was the driving force behind the growth of your company until now?
We make many small attempts. What we do doesn't have an answer anyway. So if we set up a long-term project and big agendas, it has a high chance of being a failure along the way because a lot of things change. So we try to do a lot of trial and error and make short-term milestones. We try not to be afraid of small failures, and if there are obstacles, we try to evade them while staying on the right track.
What do you consider important now?
I always emphasize to the employees to become digitally native. Until now, digital was considered as something that supplemented the offline activities. Now it has to be the other way around. For start-ups, I think it is important to notice a problem, think about why it is a problem and stubbornly stick to it until it gets solved. If resolving this problem can be of help to many people, I think it is worth trying. On the back of technology, I am trying to digitize Korea's real estate market.
BY JIN EUN-SOO [email@example.com]