How crypto makes property business more attractive?
The key problem of property entrepreneurs is that real estate is the most boring industry you can think of. Office and living spaces are perceived as something purely utilitarian. This severely limits your potential for profit and differentiation especially compared to exciting Industries...
The key problem of property entrepreneurs is that real estate is the most boring industry you can think of. Office and living spaces are perceived as something purely utilitarian. This severely limits your potential for profit and differentiation especially compared to exciting Industries like fashion, entertainment, and tech.
In this article, we will demonstrate practical strategies employed by our clients to create an emotional experience and gamification using crypto assets, and in this way earn 50% or even 100% more.
Stobox is a Consulting and Technology Company with multiple Awards and clients spanning five continents. Our mission is to help businesses embrace the potential of virtual assets. We are sharing insights from implementing projects in the range from less than a million dollars to multi-million dollar deals.
Limitations of Property Business
Let's start by discussing what it means for real estate to be boring and why is it a problem at all. Being boring means that people evaluate property transactions based on purely practical considerations such as location, size, and other technical characteristics. They have zero emotional connection to the brand of the developer, the local community, the narrative and the history behind a given property, etc.
The primary implication of that is limited upside potential. In industries like fashion almost identical items can have a tenfold difference in a price simply because of the power of a brand. Therefore, many companies enjoy gross profit margins of 85% to 90%, and two of the ten richest people in the world represent fashion industry.
In comparison, all things being equal, in real estate you can compete only on price which is the worst approach ever if you want how to grow your wealth.
To break this dullness curse, you need to position yourself as a technology company disrupting the real estate industry instead of being yet another property firm. A case in point here is WeWork. Despite the bad publicity they managed to attract capital at valuations much more typical for Silicon Valley tech startups. And even despite the failure, the founder of the company recently managed to raise $350 million for his new venture from one of the world's top VC firms Andreessen Horowitz. The WeWork's Legacy can inspire you make your real estate business insanely profitable using hybrid technology-enabled business model.
And this is when blockchain comes into play!
Growing with web3
Let us start with discussing general principles of value creation with web3, and then outline practical considerations for implementation. There are three ways to differentiate your business using crypto assets.
Craft a community
Firstly, you can use them to Craft a community. Humans create strong emotional attachment to other humnas, not companies. Community created around your product, and more broadly, around the idea your business stands for, can serve as an emotional anchor differentiating you from everybody else.
The most significant advantage of communities is increased customer loyalty: switching from engaging with your properties is also leaving the community they care about, which is much harder. This allows you to charge higher prices because customers become less sensitive to them. Moreover, community does much of the heavy lifting on your behalf. Community members engage and entertain other members, they share your announcements on social media, and generally promote your brand.
Ok, we have established that communities are great. But how exactly do you use crypto assets to create communities? Very simply – your tokens become one of the topics around which the community is created. Community is created via shared experiences and interactions – which are naturally prompted by your token.
For example, people will be participating in community relations events – such as “ask me anything” sessions with founders to get a feel for the company’s future and offer suggestions on the company’s strategy. It’s also extremely typical for investors to discuss the price projections among themselves. In this way, they are looking to soothe the anxieties about the token price. For this exact reason, investor groups and influencers are so popular. Going through token ups and downs will also definitely promote strong bonds between holders. Of course, a token by itself isn’t enough to create a vibrant community. You need a purpose, community management strategy, et cetera. But it’s a basis around which everything will revolve.
Promoting your brand
The second vital implication of crypto assets is Promoting your brand in two ways. The first is that the adoption of virtual assets makes your image more innovative. Simply having a website, or an app, or QR codes, isn’t going to make you seem advanced anymore – it’s merely not lagging behind. Tokens, on the other hand, are still far from being mainstream, so using them can position you as moving ahead of the curve. This is beneficial because it attracts people and companies, who want to position themselves as advanced by associating with corresponding brands. Secondly, tokens create a natural word of mouth. The mere fact of issuing them is enough to get some press attention. Further token price movements will become the subject of social media discussions. You can also expect additional awareness because tokenholders have a direct financial incentive to spread it. It’s basically free marketing.
Improving Monetization
The third way for to create excess returns with crypto assets is by Improving Monetization. Utility tokens and NFTs are literally new virtual products that you can sell. This product has no marginal cost of production, so it can be insanely profitable. In our experience, this is where lies the biggest potential for improving top line.
Genuine Utility of your Token
The most essential rule is that you need to create a Genuine Utility for your tokens. If there is nothing behind them, the token value can crash, damaging the brand and revenue.
Creating utility may require rethinking your business model or operations to certain extent. If the only thing you do is collect revenue and maintain the property, you don’t have much space to launch interesting tokens besides security tokens that give investors the right to invest in your business. This type of tokens is explored in some of our previous videos, which I encourage you to check out.
As for utility tokens and NFTs, you need to add a twist to make them work. Brainstorm, how can you add more value to people using your properties. Can you help them connect with each other or spend quality time via events? You can invite speakers, host workshops, or simply networking events. Or how about adding more entertainment, allocating a space to play pool or work out? The specific implementation depends on your business model.
The truth is, for millions of years proto people lived within tight communities. The industrial revolution has broken those connections, but the longing is still within us. If you can help your customers become more connected, you can create a huge value for them.
The next step is to monetize this additional value via token. For example, if you go with events, you can sell tickets for these events in the form of NFTs, but holders of utility tokens can get special discounts. There is an abundance of mechanics and possibilities. One idea to consider is adding a loyalty program, whereby tokens would serve as tradable loyalty points. This would allow people to monetize and “sell” their loyalty when they move elsewhere, instead of losing it.
The connections you create should be limited, however, to your physical spaces: your customers can live on another side of the globe. The next level of innovation, which opens insane, is metaverse. I recently made a separate video discussing applications of Metaverse in great detail, so I invite you to check it out to get a better understanding.
In case of real estate, you can create a virtual replicas of your properties, which can be visited by community members. You can hold virtual events, which are available only for holders of your utility tokens and NFTs. This way, your community transcends physical boundaries.
Sustainable token economics
But creating strong utility isn’t enough for success. You also need Sustainable token economics, so that the entire system doesn’t crash like in the House of Cards. This primarily requries a fine balance of demand and supply.
Proper legal structure
Lastly, you need a Proper legal structure to reduce risks. All kinds of tokens are becoming highly regulated, so it’s imperative to choose the right jurisdictions, prepare the necessary documents and implement anti-money laundering program.
All in all, issuing cryptocurrencies can be a game changer for your property business, increasing your revenue more than any other technology or approach. However, numerous pitfalls can prevent you from realizing the full value.
This is where we can help. Stobox is operating two tokens: Security Token (STBX) and Utility Token (STBU). We helped dozens of clients conduct their offerings.