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"we estimate there is about 1.8 million homeowners that are 55 and above, planning on downsizing in the next five years. They will release a long-held residential stock worth about $1.7 trillion. That's trillion, with a T. So it is the biggest asset class on the planet and we're starting with the wealthiest cohort in history"

Episode 32

How peace, love and veggies led to help solve one of property marketing’s greatest challenges

Mark Macduffie | CEO and Co-Founder | Downsizer.com

Mark is the CEO and Co-Founder of Downsizer.com, a digital home-buying platform that runs on R3 Corda blockchain technology and offers an affordable risk management product to protect developers from shortfall events. His MVP (minimal viable product) targets the Australian property market, but has built his product infrastructure for scale and expansion to other similar markets, such as the UK, USA and Canada. Mark is an eternal optimist and is passionate, driven, and committed to leading the PropTech disruption or simplification (as he describes it) and creating positive social impact with Downsizer.com.

In this episode we learn how peace, love and veggies (amongst other things) led Mark to help solve one of property marketing’s greatest challenges – i.e how to unlock the downsizer market

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Transcript

Anthony Denman:
Mark, welcome to the Property Marketing Podcast.

Mark Macduffie:
Thank you very much for the invite. Really looking forward to it.

Anthony Denman:
That’s an unusual accent you’ve got there, mate.

Mark Macduffie:
I’m actually Scottish, born in Glasgow, grew up in the place called the Isle of Man, which is famous for tax and TT Races. I’ve worked in five countries, but I am 20 years this month in Australia, so I’m a mixed bag.

Anthony Denman:
Sorry, tax and TT races?

Mark Macduffie:
Yeah, The Isle of Man is a tiny island in the middle of the Irish Sea that has its own tax legislation. It’s independent of the UK, so it can change its corporation tax and income tax. So you get a lot of financial institutions there. But you also, the other thing it’s famous for, is the motorbike races, the TT Races. It’s the oldest road race in the world, because the Isle of Man has no speed limit, so the motorbikers can go crazy around there and there’s a few fatalities every year, but that’s what the Isle of Man is normally famous for.

Anthony Denman:
There’s no speed limit. That’s crazy. I’m guessing there’s no Autobahn, it’s just no speed limit.

Mark Macduffie:
Yeah, and the speed limit in the towns is there. But as soon as you go past and out into the hills and the countryside, there is no national speed limit. So you can, in theory-

Anthony Denman:
Why?

Mark Macduffie:
I’ve got no idea, but it makes it entertaining, a couple of weeks of the year, when German motorbike fans come across and go crazy. It can be quite scary.

Anthony Denman:
I can’t imagine a place where there is no speed limit, but it’s maybe something that… It’s probably good that I didn’t grow up in a location like that, I reckon, because…

Mark Macduffie:
I’ve lost family members, road fatalities and there’s fatalities every year there, because of the road safety, let’s call it. The Germans come across, they have a couple of beers, they go on the wrong side of the road and they try to emulate their bike fans and often that can end in carnage.

Anthony Denman:
Yeah, I’m surprised that there hasn’t been a bit of a backlash on that and people haven’t tried to stop it all.

Mark Macduffie:
Definitely. Once a year people try to stop it. It’s the lifeblood of the Isle of Man’s economy I think. When I grew up there, there’s about 70,000 residents and for two weeks of the year, that goes up by 50 or 60%. So, you get all of these visitors coming for two weeks watching the road racing. There’s normally one or two fatalities, unfortunately.

Anthony Denman:
So how did you end up in Australia?

Mark Macduffie:
My first job, 16 years old in the Isle of Man, financial services, didn’t really know much else. I ended up working on a couple of quite niche technology systems, which actually Australia has the same systems as the first company I ever worked for, had a branch in Australia. So the system was Life/400 or AS/400, green screen, COBOL programming. Anyway, I spent my first 20 years of my career contracting on that system and moved to Australia for three months, 20 years ago.

Anthony Denman:
Wow, okay. And what happened? Did you fall in love or something?

Mark Macduffie:
How did you not fall in love with it?

Anthony Denman:
You fall in love with someone, as opposed to Australia, but yeah, go on.

Mark Macduffie:
Yeah, I came down here for three months, landed in Sydney, haven’t really thought about going back that often. The Isle of Man is, eight months of the year it’s cold, wet, and rainy and dark, and that’s the same for a lot of Northern England. When the GFC hit was probably the last time I thought about going home and there was just no work in Europe. So I ended up getting my residency and citizenship with Commonwealth Bank at the time, that I was contracting with, and they offered me a full-time job and citizenship. So I stayed and the rest is history.

Anthony Denman:
Did you always imagine that you would work in financial services?

Mark Macduffie:
No, never. I’ve got a large Glaswegian family, mostly tradesmen or shipyards. My uncles and cousins all worked in the shipyards in Glasgow and the other half of my family moved to the Isle of Man, when I was very young, and they’re all chippies and plumbers and sparkies. I was the most qualified person in my family at 16, because I stayed until 16, which is crazy now, because I didn’t go to university or anything like that. So, when I grew up I thought I was going to be… My parents had a hotel, so I grew up in a hotel. Hospitality, didn’t really like that, but I enjoyed the interaction with people. I’m very curious. I love learning about different cultures and different things, and I never really thought about financial services, or property when I was a kid growing up. I think I wanted to be a fighter pilot, but that was the Top Gun generation in the ’80s where everybody thinks they want to be Maverick.

Anthony Denman:
Yeah. Or a astronaut.

Mark Macduffie:
Yeah.

Anthony Denman:
Yeah, good on you. So, why is imagination more important than knowledge?

Mark Macduffie:
For me, I think it’s an Einstein quote. For me, one of the things I experienced in a lot in my career was I often used to run into bosses or senior managers that would look down on me, because I didn’t have a university qualification or degree, but I always countered that with; you can be as book smart as you want, but if you don’t have curiosity and imagination, it’s lost. So I like that quote, because it gives everyone the opportunity to… You’re only limited by your imagination, which I love.

Anthony Denman:
What’s the best way to breathe?

Mark Macduffie:
I have to say, I’m 48 now, I only learned how to breathe properly I think in the last five years. And a lot of what I realised was I was holding my breath quite a lot and a lot of guys my age do that. The best way to breathe, as I’ve learned, is that box breathing, like four seconds, four seconds, four seconds, four seconds. So inhale, hold, exhale, hold, and round just to calm the nervous system to the point where you can actually perform at your best.

Anthony Denman:
Where did you learn that?

Mark Macduffie:
I’ve had my fair share of health issues, and my wife and I moved out of Sydney for five years in the end, up to Byron Bay in the hills, and we regrouped and put ourselves back together and I had a good coach for meditation and breathing. Honestly, as I said, I didn’t realise I was breathing wrong my whole life. And there’s this fantastic book, I think it’s by James Nestor, that’s called Breathe. He looks into the science of breathing and the impact it can have on the longevity of your life. And I just found it fascinating, because I was doing everything wrong. So, if anybody’s watching this and wants to check that they’re breathing right, get that book and I guarantee you’ll learn a few things.

Anthony Denman:
Why did you move out of Sydney, move to Byron Bay?

Mark Macduffie:
I had a chronic illness that hadn’t really been fully diagnosed at that point in time, and I was smashing myself at work 60, 70 hours a week, something like that. And in the end, the wheels blew out and I had a health incident in the office, which wasn’t pretty and ended up in St. Vinnies, and again, that wasn’t pretty. I came back from that and basically looked to finish my career in big corporate. My boss at the time asked me to stay and I said, “I’m going to stay if you give me a three-day working week, I’m going to move to Byron Bay. I’m going to fly in every three weeks.” So I ended up staying in CommBank for another 18 months, two years whilst I, going to say, made myself redundant, handed over all of my responsibilities to people in my team. Then went up to Byron Bay to put myself back together again.

Anthony Denman:
What did that look like?

Mark Macduffie:
What did that look like? That looked like lots of breathing, meditation, working less hours, of course, less travel, less toxic stress. Bought a little place up in Byron and did peace, love, and veggies. And put myself back together again.

Anthony Denman:
Peace, love, and veggies.

Mark Macduffie:
That was before COVID made Byron cool and half of Woollahra turned up there quite quickly and we were there for five years. Both my wife and I are better now. The business has been going better and better, so I had to return to Sydney, because I was spending most of my time in airport lounges otherwise.

Anthony Denman:
What happened to you? Like you said, it wasn’t pretty, what actually happened at work?

Mark Macduffie:
What happened at work was the final part of diagnosis. I had five to six years of weird and wonderful autoimmune conditions that everybody, if anyone’s watching this, they can see that I’m completely bald. I lost all my hair, I was aching, I had hormonal issues, every other week something was wrong, my blood tests were up and down In the end, what pushed me over the edge was I had a takotsubo heart attack in the office, which is not a proper heart attack, let’s say, but it certainly feels like that.

Anthony Denman:
What’s it called? Sorry, what is it?

Mark Macduffie:
Takotsubo heart attack, which is-

Anthony Denman:
It’s like a Japanese one, is it?

Mark Macduffie:
Basically, it’s like a full meltdown and your heart… They call it an emotional breakdown. Anyway, look, they took me in for three days in St. Vinnies, and that was in an office about nine o’clock at night one evening, after another long week engaging with somebody that perhaps didn’t share my point of view.

Anthony Denman:
Oh, so you were having an argument?

Mark Macduffie:
Pretty much, yeah.

Anthony Denman:
Were you shouting?

Mark Macduffie:
I wasn’t, no.

Anthony Denman:
He was, was he?

Mark Macduffie:
It’s interesting-

Anthony Denman:
Or she was.

Mark Macduffie:
It’s interesting that you say he, but no, it was-

Anthony Denman:
She.

Mark Macduffie:
Let’s not go into that. No.

Anthony Denman:
Okay, why not?

Mark Macduffie:
Because it’s in the history books now.

Anthony Denman:
All right. So you were getting lashed by someone.

Mark Macduffie:
My body was not fit to handle the stress that was being presented to me at that point, and it gave out,

Anthony Denman:
So what happened? Did you fall over or what happened?

Mark Macduffie:
No, we were having an argument and I felt my chest go and I-

Anthony Denman:
Fuck.

Mark Macduffie:
… the typical male ego got in the way and she said, “Are you okay?” And I said, “I’m fine.” And then it happened again 60 seconds later and I said, “Look, let’s pick it up tomorrow. Let’s agree to disagree.” And by the time I got to the lift, it happened again. By the time I got to the taxi, it happened again.

Anthony Denman:
Fuck.

Mark Macduffie:
So, it was getting harder and harder. I thought that was it. I went to St. Vinnies, and anyway, the good news is it helped me diagnose the condition that I’ve got, which is Chronic Inflammatory Response Syndrome, which is basically a collection of autoimmune illnesses. And I shouldn’t have been taking some stimulant hormones that the doctor prescribed to help fix me. What they didn’t tell me was; you shouldn’t work in a stressful environment with those pills. So long story short, my body gave out and I needed to put it back together again.

Anthony Denman:
So you went to Byron, peace, love, and veggies, and everything else, and then you chose to come back into the eye of the storm?

Mark Macduffie:
I don’t know about the eye of the storm. We created Downsizer whilst I was in Byron in a two-meter by two-meter little pokey office in our little cottage up there. And that’s-

Anthony Denman:
When you say you created it, what does that look like?

Mark Macduffie:
My co-founder, Mike Kelly, is a property developer, in his own right, for 35 years in the eastern suburbs of Sydney. And he-

Anthony Denman:
Was he up in Byron with you?

Mark Macduffie:
No, he wasn’t. Well, we talked about this collection of pain points and Mike often reflected for every property he sold, he could sell two or three more if he could remove the need for a cash deposit. So, the concept of Downsizer, if you like, that’s the genesis of it. And through a process of customer-centered design, human-centered design, speaking to developers, real estate agents and home buyers, we discovered quite quickly that on the other side of the marketplace, to property developers, is a whole cohort of Australians and globally that are asset-rich, cash poor, and they’re mobilising to downsize their properties, but they don’t have the 10% cash to exchange. So you’ve got two sides of the marketplace expressing the same problem in a different way. So, Downsizer was born in the hinterland of Byron Bay.

Anthony Denman:
Okay, so how did you know Mike?

Mark Macduffie:
Mike is actually my father-in-law.

Anthony Denman:
Right.

Mark Macduffie:
So he would often-

Anthony Denman:
That’s handy.

Mark Macduffie:
Yeah. I worked in CommBank for 11 years and Mike would often, I’d hear Mike’s pain points and reflect that technology could fix this and it’s a massive opportunity, right?

Anthony Denman:
Okay. So that’s how it came about. Jeez, you married well then.

Mark Macduffie:
If you meet my wife, you’ll know that I’ve married really well.

Anthony Denman:
Is she there? Put her on. Oh, that’s a classic. So chatting to the father-in-law, because that’s so true. Everyone’s so frustrated in the off the plan market, a bit like the ultimate group really, because they’ve got no debt or mostly no debt. They’ve got heaps of cash, but you can’t shift them. You can’t shift the needle on them, because they’ll always tell you, “Oh man, but I’m in the house and I have to sell it before I buy somewhere.” And then the whole deal falls over, right?

Mark Macduffie:
That’s it. That’s it. Common story.

Anthony Denman:
And so you, having heard that, decided that maybe you could fix it through tech?

Mark Macduffie:
That’s it. I think from having solved, for a number of years, solved complex problems for financial institutions, I just felt that tech had evolved to the point where we could solve this the right way and just continuously iterated on the idea until here we are now and 18 months in and doing pretty well.

Anthony Denman:
So what was it like transitioning from a high stress working environment to peace, love and veggies, to big idea and let’s get back into the big smoke to make that idea happen on your own though, like a startup, what did that journey look like?

Mark Macduffie:
It’s still tough every day. Anybody that’s thinking of jumping into a Downsizer, that’s got 30 years of corporate experience that thinks it’s going to be easy, because you’ve been in a large corporate, you’re dreaming. I’ve led projects of $60 and $70 million in large corporates. I’ve had big teams, but when you shift and it’s you, there’s no one else, there’s a cyber attack, there’s a phishing scam, there’s a, “Who’s paying the bills on the server? Who’s designing what? Can someone do marketing?” It’s everything. So it is incredibly difficult, but so long as you’re solving a big enough idea, big enough market, and you have the right people around you, and the way we’ve approached it, I think has allowed us to do incremental proof of concept into pilot, into launch, into growth, into scale. And that’s the only way you can do it in this market is build, test, learn, repeat. And I think that that keeps me… There is a big change.
My leadership team have got 110 years between four of us in enterprise roles, in financial services and large tech in seven countries. We’ve seen a lot. So that helps, but as a founder, trying to convince people to give their career capital, that’s pretty tough, because you don’t know if it’s going to pay back, nobody knows, but then it starts to pay back, but it’s taking longer. So how do you keep people engaged? We have people approaching my leadership team to offer jobs all the time, and I’m struggling. You can struggle to hold good talent, because we can’t afford to pay them like a large corporate. So there’s all sorts of different challenges, but I don’t regret it for a second.

Anthony Denman:
How many knockbacks have you had along the way?

Mark Macduffie:
If you talk about investment knockbacks, I would say we probably pitched last year, in a terrible capital market, we pitched to maybe 50 or so and 49 of those were a no. If you think about pitching to developers and agents early on to use your service, I’d say we’ve pitched early on to now maybe 200 or so, 250 maybe, developers and agents combined. And it’s amazing the journey, because nobody wants to go first, ever. So, we signed up a couple of developers in three states, 18 months ago, and they’re still with us. So, I’m really grateful for the support from those guys in particular. I’m just going to shout them out, Geocon, Lucent and HELM in three different states. Those developers took a punt on us early on and have supported us throughout to the point now where we have something like 50 developers and agents on our platform and the market’s starting to prove and they’re coming to us now. It is a horrific journey and the knockbacks make it even sweeter when they come back to you and say, “Can we work together now?”

Anthony Denman:
So now I’m starting to understand the eternal optimism.

Mark Macduffie:
Yeah. I think what makes me work, a lot of people are the same, if you tell me it can’t be done, it just makes me more determined to do it. Everybody’s got their own journey. Everyone’s got their own thing going on. I don’t know how many times I’ve been offered products and I go, “That’s a really great product, but it’s just not for me at this point in time.” That’s fine, that’s absolutely fine. But yeah, I think when you’ve had personal knockbacks and you’ve had health knockbacks for 10 years and you don’t know what’s going on and you’re really not sure whether this is going to work out for you on a health basis, work is not that important anymore, is it? I can take knockbacks from any corporate, large and small, so long as it’s done in the right way.

Anthony Denman:
And how’s your health holding up now? Are you having the similar issues, or are you okay now?

Mark Macduffie:
I think my health journey is… I’m 48, everybody at my age bracket and beyond needs to be vigilant. I will always have some things I have to be conscious of, but touch wood, I’m in a good spot right now, thanks for asking.

Anthony Denman:
I guess working, it’s a different dynamic, isn’t it? Do you know what I mean? You can be busy working for someone else and not doing something that you’re absolutely love and passionate about, or you can be busy working for yourself and doing something that you’re really passionate about.

Mark Macduffie:
Yeah. It’s a huge difference. There’s a whole set of new stresses, but I’m incredibly proud of what we’ve built so far and if we are 50% as successful as we plan to be, then the team that we’ve got around us will be with us for a long time and hopefully we’ll build something we can all be proud of. You can’t always say that working in a large corporate.

Anthony Denman:
Totally, you can’t always say that working… You can very rarely say that working in a large corporate, not that I’ve ever worked in a large corporate, actually. I’ve always been out on my own. But one thing I always knew growing up was that I was going to work for myself, one way or another. You know what I mean?

Mark Macduffie:
Yeah, yeah.

Anthony Denman:
How big is the Downsizer market in terms of dollar value?

Mark Macduffie:
Dollar value, if you look, so Australia, we estimate there is about 1.8 million homeowners that are 55 and above, planning on downsizing in the next five years. They will release a long-held residential stock worth about $1.7 trillion. That’s trillion, with a T. So it is the biggest asset class on the planet and we’re starting with the wealthiest cohort in history.

Anthony Denman:
Wow, that’s amazing.

Mark Macduffie:
So if you then look at our next target market of the UK, if you add the UK and the Australian homeowner market, 55 and above, there’s 9 million homeowners that are 55 and above. It is a big market. That aging population is only going to grow as a proportion, as that whole macroeconomic landscape and demographics. So it’s a big market and it’s growing, and they’re the most wealthy generation ever.

Anthony Denman:
How can that help solve the current housing crisis?

Mark Macduffie:
I think the housing crisis… It’s like a national sport, Australia. The property market in Australia, I’ve noticed, it’s either boom, or bust, or there’s a crisis, or there’s not a crisis. And the one thing I know is that no one thing will fix it, but I think from a Downsizer standpoint, the way that we look at it is if we know that there are, let’s say there’s 1.8 million homeowners planning on downsizing in the next five years, our data tells us that 90% of that 1.8 million have three and four bedroom properties. So, at any given night in Australia, there’s somewhere between 10 and 13 million spare bedrooms lying empty.

Anthony Denman:
That’s crazy.

Mark Macduffie:
So if I can help in some small way and Downsizer can help in some small way, help downsizers release their long-held residential stock, move into more appropriate housing, that frees up those long-held residential stock for the people that want to upsize. And that cascading effect should help throughout the market, but it can’t be done in isolation. We had an event at the weekend and we had a couple there with two teenage daughters, and they are looking to buy an apartment for themselves and two one-bedroom apartments each for their kids, because they’ll never get on the property market. So, the bank of mum and dad is now seeing that they can downsize their property, buy their apartment and two smaller apartments from the net equity in their current dwelling. So, to me, that’s a small example of how you can help people get onto the ladder and help free up long held stock. And in the middle of it, you’ve got developers developing, builders building and the economy keeps moving, nevermind the net equity that gets released that people will spend. So, for me, I feel like there’s a lot of levers there.

Anthony Denman:
Yeah, totally. I think everyone probably has that example. You know what I mean? I’ve got one. My mother-in-law, she’s in a house with I think two or three bedrooms that aren’t being utilised and she’d dearly love to move, but yeah, she can’t get her head around the sale and she certainly doesn’t have the deposit. Everyone probably most likely has an example like that or similar to that. And therefore I guess an empathy around that, is that why adopting a human-centered design approach is so important?

Mark Macduffie:
For me, yes. Any innovation that you want to have a positive impact, in our opinion, has to start with the humans involved in it first. I learned this methodology at CommBank, I was one of the first ones in CommBank to use this methodology, which came out of Stanford Design School. So it’s used by Apple and Amazon and Uber and anybody, Qantas, all the big four bank use the same methodology. But you start with the humans at the start and throughout the design process. So what that meant for us was speaking to developers and conveyances and real estate agents to understand; what are the pain points? Why? How does that make them feel? If we create this thing, why would it matter?
But more importantly in our case, speaking to the downsizers to understand those emotional challenges, what we found is that mostly everybody’s got their own story. We started our business and we were really looking at that initial downsizer segment of truly asset rich, cash pour, and they were moving for health reasons, or they were moving for they couldn’t maintain their household. One of our first buyers, he still calls me every now and again, he had grass shoulder-high and he can’t look after it. He can’t pay, and he can’t afford to pay a gardener to maintain the house anymore. So, true story.
Anyway, whether you’re doing it for maintenance reasons, or health reasons, or whatever the drivers are, there are many barriers and most of them don’t have the deposit. But what we’re also seeing now with the human-centered design is we’re seeing people in their 40s to 60s that are expressing; inflation, cost of living, and my new mortgage rates, I can no longer afford to stay in the house I’m in, but I’ve still got some equity, because I’ve had 10 or 15 years of equity, not 20 or 25 or 30 years of equity. COVID has also changed the game. So people in their 40s to 60s are going, “Do you know what? I can move 30 minutes inland or south or north, I can sell my current dwelling, pay off, or reduce my mortgage and still have a floor plan that’s big enough for me. So I’m downsizing my lifestyle or my mortgage, but not my house.” So we’re continuously speaking to more downsizers, because the more you learn, the more you can continuously iterate and innovate. So that’s why human-centered design is at the start and the middle and the end of everything that we do.

Anthony Denman:
What is agile technology delivery and how does that assist downsizer.com?

Mark Macduffie:
Agile is a software delivery methodology that in effect allows you to make rapid change quickly by understanding the requirements earlier and quickly. And instead of doing this old school traditional, “I’ll understand requirements, I’ll design it, I’ll plan it, I’ll deliver it,” and that might take you two years. What we’ve done is deliver quickly and then we build and test, learn. Every four weeks we deliver new fixes or new enhancements, but when you blend human-centered design with agile delivery, what you get is real feedback from the humans involved and then you can execute. In some cases within four weeks, we can have… Mark can say, “I really want to change the way this looks, this field looks on my development listing.” I go, “Cool, you are the fifth person that’s asked for that. There must be something in it. Why don’t we change it?” And we change it quickly and within four weeks it can be delivered. Whereas if you’re working in large corporates, not using agile and continuous technology delivery, you might wait months or years for that change.

Anthony Denman:
It’s so important in the business you’re in. We’re talking about human-centered design approach. Is there a perfect end user for Downsizer? What would that person look like?

Mark Macduffie:
I think the target end user for the buying persona, that this is the homeowner, they’re someone that has built up equity in their current dwelling and wants to downsize to a smaller, or lower price dwelling and doesn’t have the cash deposit, or doesn’t want to pay the cash deposit. It’s an important distinction for us now, because we’ve had buyers that now realise in a high interest, savings environment, they can pay our fees and leave their deposit in their high interest term deposit and they’ll be a hedge.
When we first launched, and this is tying together nicely the human-centered design piece is, when we launched its; asset-rich, cash poor that can’t pay for a deposit. Now what we’re seeing in the last 18 months since we launched, inflation goes up, cost of living goes up, mortgage rates go up and so do savings rates. That’s how the economy works. Now you have asset-rich, cash rich homeowners that go, “I could afford to pay my 10% deposit, but I’ll make more money if I leave my 10% deposit in my high interest account for two years whilst the new property’s being built,” so they can pay our fees and still be ahead. So that’s the benefit of continuously involving the customer throughout and we can continuously change the messaging on marketing as well.

Anthony Denman:
What’s the perfect developer for Downsizer look like?

Mark Macduffie:
A perfect developer for us is someone that is building for owner-occupiers or investors, and that’s a broad spectrum, but really that is conscious of the downsizer segment as the largest cohort in Australia. We’ve had one of our core developers, 90% of his projects he says in the last 10 years have been owner-occupied downsizers. So he builds the right floor plans, big entertainment spaces, wider hallways and the like.

Anthony Denman:
Is that HELM?

Mark Macduffie:
Yeah. So HELM, Mark Monk does an absolutely fantastic product and he’s been one of our longest-term supporters. So developers that understand that downsizer cohort and understand that technology is an enabler and they also understand that this thing will continue to evolve. It’s not like a home run on day one every time.

Anthony Denman:
Yeah, it’s funny you say that, as soon as you started talking about that, and you mentioned earlier that HELM were one of your startup developers, I remember looking at their website not so long ago and thinking just how thorough and on the money they are in terms of their marketing now. When I’m talking to my developers about promotional material or content, I often mention that it’d be great if you had some affidavits, you’re getting in some people who have experience living in your product previously and get them on video and have them say a few things. And I noted when I was doing some research on HELM, that’s exactly what they do and they do it so well. And so, when you mentioned you had one particular client that was very good in that space, that’s how I thought of them.

Mark Macduffie:
Yeah. Mark Monk does a great product and he knows all of his buyers almost personally. He spends the time to get to know them and we are really proud to be working with him.

Anthony Denman:
What tools do you have in your kit bag that allow you to sell the Downsizer concept to developers?

Mark Macduffie:
Everybody can use social media and targeting, but what we have that really helps differentiate is we have every six, maybe every six to nine months, we do a Downsizer buying intentions research piece. And that tells us with a high degree of confidence where the Downsizer hotspots are. So what that will look at, is go for example in Mark’s area, in North Sydney, Northern Beaches, Cremorne and Mosman, there’s about 20-

Anthony Denman:
Yeah, lower North Shore.

Mark Macduffie:
Yeah, there’s about 20,000 homeowners that are 55 and above in that area.

Anthony Denman:
20,000?

Mark Macduffie:
Yeah. So our data is geographic. So I can go into a developer sales suite and say, “Okay, there’s 1.8 million downsizers mobilising over the next five years and 525,000 of those who are in New South Wales.” And then I can drill down into suburb LGA and go, “Okay, in your suburb, here’s how many downsizers there are. Here’s when they want to move and here’s, more importantly, their debt position.” So it’s not 100% accurate, but statistically it’s very accurate. So we are able to say to developers with a fairly high degree of confidence, “This is a hotspot. You should either acquire a site there or let us target there for you.”

Anthony Denman:
Yeah, that’s amazing. That would be very compelling, I would’ve thought.

Mark Macduffie:
I’d say, of the pitches that we do with developers, if someone’s on the fence and they see that data, it normally nudges them over. It’s a product in its own right that we’ll probably look to sell in its own right.

Anthony Denman:
I bet. What does a good lead look like for a developer?

Mark Macduffie:
A good qualified lead in this market, I think, any developer wants, if you can see intent, their position, that’s great. And ideally they’ve been in the sales suite, that’s all amazing. But what we do is go a bit further and go, “Okay, Mark owns the house he says he owns,” because we check the land title office, we value the property digitally, and if it’s more or less above that, and then we ask the qualifying question, which is; how much debt do you have? So, we can present developers with; the buyer is Mark Macduffie. He lives in Byron Bay, he has a house worth $2 million. He has a debt of $250,000. Therefore, his net equity position is this. And he’s motivated to buy. So, the way that we take buyers through the funnel, really we think, when we hand it over to the developer, it’s a fairly high degree of conversion.

Anthony Denman:
How do you manage leads for developers? Do you have your own in-house sales teams, and/or do you partner with external agents?

Mark Macduffie:
Yeah, we have two parts of our business really, which is tech, financial services, and we also have our in-house sales agents, which act as channel sales agents. So, developers that work with us can choose one of two models. One, we act as their channel agents on an open agreement or exclusive agreement that they grant us. We handhold those leads through the funnel, through the qualification process that we mentioned early on. Or the other model is straight just bond qualification and platform listings. So we have a very flexible model for any developer need.

Anthony Denman:
What is the Downsizer Bond and how does it differ from the standard deposit bond that’s been around for 30 years?

Mark Macduffie:
Standard deposit bonds are mostly one size fits all. And what I mean, it’s 10% at call, mostly short term and mostly backed by a mortgage, or a proven ability to pay. The Downsizer Bond differs very slightly in that it’s a much more consumer friendly product, because we qualify the net equity position in the way that I’ve described before. And because we know that our downsizers are proven to have 100% of the purchase price in their current dwelling, we’ve been able to greatly reduce the price. And the second thing that we’ve been able to do with our insurer or our bond provider, I should say, is we have this thing of a double trigger. And the double trigger is this; if Mark buys a million dollar property off the plan and two years from settlement, or a two-year build, Downsizer engages Mark to say, “Hey, your new property is almost ready.”
If Mark walks away at that point in time for any reason, normally a standard deposit bond is at call 10%. The fund is like that, and the developers obviously love that. But on a consumer standpoint, if in a growing market the developer tears up the contract and sells it for $1.5 million, the developers doing pretty well and shouldn’t really call on the bond. So the Downsizer Bond only pays out on a double trigger for a loss, so that has the impact of greatly reducing the risk and therefore reducing the price. But we offer, to be clear, we offer bonds right across the board, whether someone has a 300% equity in their dwelling or 50% of their dwelling, we can still find solutions for it.

Anthony Denman:
We talked about before, we talked about growing up on the Isle of Man and becoming a boat builder or should have become a boat builder. Did you ever imagine that you would one day be a real estate agent or pseudo real estate agent?

Mark Macduffie:
Yeah, it’s definitely not something that I woke up every day thinking about. And I don’t have the blue suit uniform for Saturday open houses.

Anthony Denman:
Do you have the Porsche?

Mark Macduffie:
Far from it. Far from it. No, I did not set out to be a real estate agent. I’ve always been interested in property. Again, I’m a massive sports fan, so if you arrive in Australia where it is a national sport, then you could just call me a sports fan.

Anthony Denman:
Yeah, that’s pretty funny actually. I got that television commercial where they say, I think it’s for Tab, and they’re debating what’s Australia’s national sport, which is, by the way, which I do believe, and I concur with the creative outcome on that campaign that it is cricket, is our national sport. But yeah, I guess property wouldn’t be too far behind. Did you ever play cricket?

Mark Macduffie:
Funny story. I was obviously born in Glasgow, so I’m Scottish and I got selected for the island, equivalent of state, under-16s cricket team. My cricket whites were hanging up in the backyard and my dad came home. And let’s just say there was a few Glaswegian expletives that were basically saying, “No way, as a son, playing cricket. No way.” So the cricket whites were hidden after that. But yeah, I played cricket when I was younger.

Anthony Denman:
Why not? What’s wrong with cricket?

Mark Macduffie:
My dad’s, if you asked my dad, he’s gone now, but his view is an English gentry game. So he was very much gentry English, anybody but England, which is maybe why I fit into Australia so well.

Anthony Denman:
What’s a Glas… What’d you just call it? A Glaswegian?

Mark Macduffie:
Glaswegian is someone born in Glasgow, Scotland.

Anthony Denman:
Glaswegian expletive. What’s a Glaswegian expletive sound like? Can you give me a couple? Come on. Come on, give me a couple.

Mark Macduffie:
“No way, as a son of mine, wearing a fucking set a whites.”

Anthony Denman:
Very good. No, we’ll leave that in, 100%. Oh yeah, this is a good one, a good question. Can a Downsizer end user purchase established stock as opposed to off the plan stock? And if so, what does that process look like and how does it change the sales process?

Mark Macduffie:
Yes, you absolutely can. We started our business with off the plan, which was probably one of the hardest, the most complex journeys to do. But we’ve already sold two existing pre-built… I don’t know the terminology, but two existing properties-

Anthony Denman:
Yeah, it’s a good question. We often talk… I think, when I say we, the category, I’ve been around as long as anyone, we were saying that we’ll call off the plan, see off the plan project marketing and we’ll call established stock general agency, I think is a pretty good term for it.

Mark Macduffie:
Yeah. So we do general agency. We’ve had a couple of sales already. The sales process changes ever so slightly. So instead of us onboarding stock via developers, we’re really now starting to target local general agencies across the country. We have demand right across the board. It’s interesting, we’ve had searches for suburbs, 1500 suburbs, but we only have projects in about 60. So the demand is national. That is not limited to off the plan. It is obviously established stock as well. The biggest difference really is the price. The price is really cheap. But the other thing that has to work is that the vendor has to accept a delayed settlement.
So, how it might work in the perfect world is this. Let’s say that Mark wants to sell his established property for $2 million in Surry Hills. A good established agent will say, “Hey Mark, I think that’s probably at the top end, but your apartment looks like it might suit Downsizers, so let’s list it on Downsizer. If you accept a delayed settlement, I think I might be able to get more people at auction to that open house and auction. And therefore you get more bidders and therefore you’re likely to achieve a better price.” Because what we can do is pre-approve as many people bidding at auction for that $2 million unit. A good agent will ideally get three or four of those bidding against each other, but only one will be successful in a Downsizer Bond. So, the more people are at auction, the better price for established stock.

Anthony Denman:
Yeah, you’d imagine most vendors would take you up on that offer, I would’ve thought, unless obviously they needed to sell quicker than that.

Mark Macduffie:
If it’s time or money, most people would probably take the money and wait for the 120 days delayed settlement to get the best price.

Anthony Denman:
I’m going to take you back to Byron Bay now. Peace, love, and veggies. And do you eat meat or you just eat-

Mark Macduffie:
I eat meat, yeah.

Anthony Denman:
Okay. Did you eat meat then, or was it-

Mark Macduffie:
Yeah, I’m probably not the full peace, love and veggies, but I’m healthy, clean living.

Anthony Denman:
Peace, love and veggies, and bangers and mash.

Mark Macduffie:
Bangers and mash, yeah, why not?

Anthony Denman:
Yeah, they go together good, don’t they? Bangers and mash.

Mark Macduffie:
As long as they’re ethically farmed, then it’s all good.

Anthony Denman:
That’s right. Bangers and mash, just like Sonny and Cher, really. So back to Byron Bay, Mike, father-in-law, told me the pain point and come up with this great idea. How did you get the URL, downsizer.com?

Mark Macduffie:
Okay, this is a good story as well. Thank you. So our business is actually called Block Builder, and it was incorporated around the hypothesis of building blocks in the property space with blockchain technology. But as we went through this customer-centered design, human-centered design exercise, we quickly identified this large cohort of Australians and globally that are downsizing. And anybody that started a tech business, they’ve all done the 02:00 A.M Googling; “What about this? What about that? We’ll call it this. We’ll call it the other. Is that available? Is it not?” Anyway, late one night, wasn’t sleeping, happened to check on a GoDaddy, I think it was, and downsizer.com was available, and I know that I’d searched-

Anthony Denman:
What? No way.

Mark Macduffie:
… absolutely any derivative of downsizing, downsizer, downsize. We’d looked at everything and for some reason this looked like it was available. I put it in my checkout and phoned the States and this lovely lady said, “Oh yeah, honey, that looks like it’s available. Ah, that’s a premium brand. Ah.” She says, actually, they didn’t pay their bills, and the expiry date of the bills was 24 hours before I searched for it.

Anthony Denman:
No way.

Mark Macduffie:
Way. So the URL is something that became available, because someone didn’t pay their bills for three years.

Anthony Denman:
No way. Oh, mate. It was always meant to be.

Mark Macduffie:
The universe is definitely helping-

Anthony Denman:
I reckon the universe, mate. The peace, love and veggies helped you there. Just .com? .au, you got that as well?

Mark Macduffie:
We got that as well. We also-

Anthony Denman:
Was that always available?

Mark Macduffie:
It became available, because we had the.com, it became easier. So somebody else had it, again it expired, but we had rights, because we took the.com. We also picked up upsizer.com. So coming to a real estate market near you is upsizer.com. The simple hypothesis is that if we do capture the downsizer market, as I mentioned before, for every one of those downsizers, there’s probably two or three people trying to get into that long held residential stock. The difference with upsizer.com is basically we work with a lender or mortgage broking network to do the refinancing. We’ll have a whole body of off-market residential stock for the downsizers that are going down. So, our pitch to developers will be, “If you list with us, you list on two sides; Upsizer and Downsizer.” But the buyers, really, you can market to a point in life, rather than… You can pitch to Downsizers and have people go there. And you can have Upsizers. It looks and feels pretty similar, but it’s just two sides of the same coin.

Anthony Denman:
What else?

Mark Macduffie:
What else? We are launching Downsizer in the UK, looking for spring 2024. We’ve just signed a global insurance partner and we are early stages for getting five or six developers in a pilot for 2024 in the UK. We’re backed by Austrade, as a high potential tech export. So that’s been going pretty well slowly in the background. And there’s other adjacencies. So our business really is securing property assets with an insurance instrument and large assets, large purchases could be boats. So we spoke to a boat manufacturer, for example. Boatdeposit.com is ours and out there, but we’ve probably got another six months ahead of us before we go hard at it. But we spoke to a boat manufacturer in Australia and said, “Tell us about your typical transaction.” And he said, “Our highest volume transaction is the 5400. And the 5400 is anywhere between 2.25 and 2.75 million, depending on the fit out. And it takes between 24 months and 36 months depending on the fit out. The deposit is 10%.” And I’m like, “That sounds an awful lot like it’s a two bedroom Surry Hills apartment.” So, the concept is the same. You’re securing an asset, you’re paying a deposit, and it takes a while to deliver. Our platform components can be white labelled to do exactly that.

Anthony Denman:
That’s going to keep you busy till the end of time.

Mark Macduffie:
Maybe not forever.

Anthony Denman:
No, I guess you’re a tech entrepreneur, you’ll be in and out and you’ll be buying one of those boats yourself, I reckon.

Mark Macduffie:
Well, that would be nice.

Anthony Denman:
How do you promote, apart from doing stuff like this, how do you promote and advertise downsizer.com?

Mark Macduffie:
Yeah, I have to say that the marketing and PR has been probably our biggest challenge. Across our team, we probably didn’t have that marketing muscle, but we’ve learned a lot of lessons. So we do all the usual things like social media, retargeting, industry press, other industry press let’s say. But if you tie the social media marketing with our data, we know where they are, so we can be more cost-efficient on how we target them. But the thing that’s working for us increasingly is we onboard a developer, we onboard the stock. Four or five weeks later, we do a joint event. What we’ve learned about the downsizer market is this; they love an event. They love merchandise, they love data. So if you can get them in a room and get them talking to someone…
So our chief economist is Michael Blyth. He’s the former chief economist of Commonwealth Bank. So we’ve run a couple events with Michael. We had an event in Newcastle. We sent out an EDM to 40 or 50 potential downsizers. We got 12 couples in the room. Michael gave a 10, 15 minute educational speech on why now is the best time to downsize, and we exchanged three couples on that night. So, what we’re learning is get the word out there, do the EDMs, the testimonials, but nothing works better than a little event. I did an event on Saturday with a developer in Gosford. Again, similar outcome. We had 20 or 30 people in the room and it looks like four will exchange in the next couple of weeks using the Downsizer facility. So it’s a combination of traditional and get events and get some educational information there.

Anthony Denman:
Which developer?

Mark Macduffie:
That’s Ace Developments in Gosford for the project was the grand. Congratulations boys.

Anthony Denman:
Good.

Mark Macduffie:
Great product, good launch.

Anthony Denman:
That’s good. We did the marketing for it, created all the collateral and the brand identity, the website and the CGI’s and the blah, blah, blah.

Mark Macduffie:
Great products, great location, great price point, and a real mixture of traditional downsizers, but also that bank of mum and dad, 40 to 60 thinking ahead and investors as well. So a real mix.

Anthony Denman:
Whereabouts did you have the event?

Mark Macduffie:
It was up in Gosford.

Anthony Denman:
In the actual display suite?

Mark Macduffie:
Yeah, in the display suite.

Anthony Denman:
So that’s interesting. You actually did a launch with a developer in their display suite. Do you do many of those types of events?

Mark Macduffie:
We’ve got six coming up before Christmas. So, increasingly, we’re really saying to the developers when we’re on board, “List with us for six to eight weeks, and then let’s send out an EDM to the expressions of interest that we think are on the fence. Get them in a room, educate, and generally that will convert.”

Anthony Denman:
What a great idea. And you’ve got that credibility, don’t you? And the contacts that you made at CBA, I guess really assistant in that sense.

Mark Macduffie:
Definitely.

Anthony Denman:
Do you do any other sorts of events? Because that’s like a sales event, really.

Mark Macduffie:
It is a sales event. Look, we, as a young startup, it still takes a bit of time for developers to trust, but now the data is we’re converting in those events, because we’re doing them in the right way. We’re giving the right educational content. For example, not everyone is aware of the Superannuation downsizer tax incentive. And at the weekend, I’d say 20 couples, and I would say 50% of them were aware of the tax incentive. And one couple in particular when we told him, his eyes lit up, because he’s 70 years old, mid-70s, doesn’t have a massive Super balance, but is looking to release about $300,000 of net equity. And I said, “You can put that into your Super tax-free. You know that, right?” And he was completely unaware of it. Educating with credibility is definitely helping us convert in those intimate settings.

Anthony Denman:
I bet it is. Do you see downsizer.com as an industry disruptor or an industry simplifier?

Mark Macduffie:
If I had a gun to my head for those two, I would say simplifier. As a guy that’s worked in tech, as a guy that’s been in tech and innovation, a lot of the words around disruption I think can be a little bit negative, because incumbents can take it the wrong way. We are here to work with everybody in the industry. We believe that, as I said before, I think it’s the biggest asset class on the planet, and we’re unlocking the wealthiest cohort in history. There’s enough space to play there. I’d rather simplify and we can all benefit, partner, we can all benefit and ideally help some people into their next homes along the way.

Anthony Denman:
That’s a really interesting perspective on things, isn’t it? I think some people really like to take on that competition, like the competition as The Art of War. Have you read that book?

Mark Macduffie:
I’ve seen excerpts of it. I won’t pretend I’ve read the whole thing.

Anthony Denman:
No. Okay. Yeah, I’ve read a book called The War of Art.

Mark Macduffie:
I haven’t heard of that one.

Anthony Denman:
Yeah, no, it’s cool. It’s a good book actually. Basically what it is, it’s about the war in your head and the things that prevents you from being the best creative version of yourself.

Mark Macduffie:
I will look it up. That’s a daily challenge for me.

Anthony Denman:
Yeah. No, it’s really good, really good. Very well-read piece of literature and one that, it’s really interesting, the things that you tell yourself, as self-talk, that prevents you from just getting on and getting creative stuff done. I might just ask, this is a very interesting idea that you’ve stumbled upon, let’s say, and that you have this incredible opportunity to unlock such a significant category. So there must be an infinite, almost, number of buttons that push you along. What do you get the biggest kick out of on this journey? What do you enjoy the most about what you’re doing?

Mark Macduffie:
For me, creating something new that is having an impact on more than one group of people. So in this market, if we can help developers develop and builders build and agents sell, but more importantly, you’ve got this cohort of Australians transitioning from what might be their last big transition in life, as easy as possible. That’s pretty amazing. If I tell you an example of one of the first guys we helped that really just staggers me as a young startup, a guy in his late 70s, had $5 or $6,000 in his bank account. He was in his family home for 30 years, couldn’t maintain it anymore. This is the gentleman with the grass that was shoulder-high. Through COVID, he was struggling. He needed heart surgery, and he had a line of credit with one of Australia’s biggest banks, I won’t say the bank, that was accruing interest of about $5 or $600 a month.
So if he’s got $5 or $6,000 in his bank account and he has no source of income and his interest is going up every month, you don’t need a calculator to figure out he’s in trouble. We helped him get into a new apartment. He bought it off the plan, six months… Sorry, nine months from settlement, the developer paid all of his fees, Geocon did a great job, paid all of his fees, paid our fees, and he was able to plan the transition, pay off his debt, regain financial independence. And the kicker for us is he’s an Order of Australia merit holder for services to the Islamic community. So, he actually schooled us on, or reminded me that our product is actually likely to qualify for Sharia law, because there’s no interest. So, when you help people like that, I got to tell you, it felt so humbling to help him.

Anthony Denman:
Wow, that’s interesting. Sharia law, tell me a little bit more about that.

Mark Macduffie:
Yeah, so I don’t profess to be a Sharia or Islamic banking specialist, but I should have really picked this up, because I’ve worked in financial services my whole life. We asked this gentleman, this buyer who is an Order of Australia merit holder for services to the Islamic community, if he would do a testimonal. And he said, “Sure, no problem.” And he paused and hesitated and he said, “Would you mind if I said a few words about my community?” And I said, “Sure, go ahead. What are you thinking?” And he goes, “Your product is perfect for my community, because in the Islamic faith, you can’t give or receive interest.” So there’s a whole sway, there’s a whole market for us to open up there when we are formally approved as a Sharia friendly product.

Anthony Denman:
And are you now formally approved?

Mark Macduffie:
Not yet. We’re a couple of weeks away. It’s a long process. You have to go through an assessment criteria with an international body, and then we’ll get to a formal point where we have to be signed off by the Muslim, Islamic clerics. Yeah, so a long process, but it will open up a significant market for us as well.

Anthony Denman:
Yeah, good luck. Good luck with that. This is a new question that I’ve been asking, and we’re almost there, by the way. This has been really interesting, and I think this is a genuine… I was going to say disruptor.

Mark Macduffie:
You can, you can.

Anthony Denman:
No, I feel like it’s not. It’s a simplifer, and I think that’s a really important distinction to make. We just got to, off the plan category especially, I think has been, it’s been a tough year. There’s not a lot coming out of the ground. And one of the reasons for that is that we’re just being restricted by interest rates has been a… Obviously, and the costs of construction. That market that we’re talking about, not really affected at all by interest rates. This is one of those genuine ideas that can really help the category.

Mark Macduffie:
Thank you.

Anthony Denman:
Yeah, no, thank you for taking the time to come on the show and to tell everyone about it. I think it’s really valuable to everyone. So I’ve got this new question, which I’ve been thinking about a lot. And because I’m an old dad, I know it’s hard to believe that I’m actually old, as old as I am. I won’t tell you how old I am, but I do look 10 years younger. I’m lucky that my wife is more than 10 years younger than me, so we actually look like a normal couple when we go out. Anyway, I’ve got two young kids and I’ve been wondering if I only could just tell them a really sage piece of advice. And if I was able to do it in just one sentence, like a few words, what would that be? And I know you’re not a dad, but I know you’ve got nieces and nephews and you’ve thought about this yourself. What would you say to them if you had the opportunity to do-

Mark Macduffie:
For me, it would be something along the lines of; stay curious, ask questions. And also remember, everyone has a story. There’s something going on in everyone’s life, so just be empathetic towards that. That would be it. If I could tell myself that when I was younger, I’d probably be in a nicer position right now.

Anthony Denman:
Yeah, me too. I think that empathy is a really important one. And I think of my mother-in-law and my father-in-law and how important it is, and also all the livelihoods really that depend on an initiative like yours. It’s a great thing that you’re doing.

Mark Macduffie:
Thank you.

Anthony Denman:
Congratulations, mate. If somebody wants to get in touch with you, what’s the best way for them to do that?

Mark Macduffie:
Go to downsizer.com and you can leave your details there. You can also hit me up on LinkedIn. I’m always available, but I would say go to downsizer.com and leave your details. We’ll get back in touch.

Anthony Denman:
Fantastic. Thanks mate. Thanks so much for coming on the show.

Mark Macduffie:
You’re very welcome. Thanks for the invite and thank you very much.

About Us

The Property Marketing Podcast is an original podcast hosted by Anthony Denman, co-founder of Our Agency. In each episode Anthony talks to Australia’s most experienced property professionals, exploring their personal & professional stories whilst unearthing insights on how to create the most successful property brands possible.

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