Disclaimer: The below post is a translation of the original article published on sumave.com. Due to the foreign language nuances, slight imperfections and distortions may be present in the below text.
JARECO held an international real estate conference in September 2019. The conference was held over two days, with over 560 industry participants from 15 countries and regions. The speakers also represented the international community. Among them was Propy founder and CEO Natalia Karayaneva.
Propy is a leader in the real estate and blockchain fields. Propy completed a blockchain-based real estate transaction in September 2017, in Kiev, Ukraine. In April 2019, Propy facilitated blockchain-based real estate transactions in Niseko, Hokkaido.
In June 2019, the National Association of REALTORS (NAR) invested in Propy. It can be said that Propy is the world’s most successful startup in blockchain and real estate.
What Is Propy?
Propy provides an interface for real-time international real estate transactions using blockchain tech. These methods help overcome traditional challenges in international real estate transactions, including the below:
- There is no unified real estate platform.
- It is time-consuming to transfer ownership, as well as risky and expensive.
- There is no convenient online payment mechanism.
- Real estate purchase procedures vary by nation and by city.
- Standard protocols for online transactions are not established, especially internationally.
To solve these problems, Propy created its real estate transaction portal. Founder Natalia Karayaneva answered questions in our interview.
Interview with Natalia Karayaneva
Q: Thank you for taking the time to speak with us. Can you tell me what was your first career?
It is an honor to meet you. I began my career as a real estate developer. I was working in traditional real estate sales. Besides that, I was a software engineer.
Q: Did you also work as an engineer?
Yes. I was working as an engineer in 2006. I was developing a social networking app that was sort of like today’s Facebook. Thousands of people registered on that application. But I didn’t have the vision to scale.
Q: What did you learn as a student?
Two of the important things that I learned included Sustainability and Coding.
Q: How did you learn to code for your career in engineering?
The university that I attended required me to learn coding. Before that, as a high school student, I had almost never touched a computer. I was interested in the mechanism of computers and hard disks, and I became excited to learn coding.
Q: Was it essential to learn coding?
Definitely. Even economics and law students learned coding in their early courses.
Q: Regardless of major?
Yes. It was the environment. I had to do it no matter what major I chose. As I learned coding, I changed my major from Sustainability to Coding.
Q: What was the deciding factor that made you change your major?
The content activated my passion and curiosity. There was a woman among the professors who taught my coding classes, and I was influenced by her. The other professors were also fascinating. Engineers, too. The people whom I met made me feel that the career was attractive.
Q: When you became an engineer, did you already know about blockchain?
No. I first learned about blockchain around 2014. From 2006 until 2014, I was a traditional developer. There was no blockchain environment. Sure, I had heard a lot of news about Bitcoin, but I had no special interest in the topic, at first.
Q: But you grew to care about blockchain while still a developer?
Q: What made you decide to start Propy?
There are two things. One was a customer whom I knew when I worked as a real estate developer. They thought they wanted to buy real estate in Silicon Valley and Japan, but at the same time, they were afraid of international transactions. I wanted to get rid of that fear and make it possible for customers to buy overseas properties with peace of mind.
Q: What is the second one?
With the rise of platforms like Airbnb, it was becoming easy for foreigners to rent overseas properties in Dubai or Japan. If you can rent real estate easily, I think you should also be able to buy and sell properties internationally with the same ease.
Q: What are your two main reasons for starting a business?
I think that nobody has yet been able to sell properties across borders, and I began to feel the potential to be an industry leader. There is the potential to be able to buy and sell real estate internationally using technology.
Q: What got you to use blockchain technology?
I had no notions of incorporating blockchain. At first, I didn’t think of Propy as a blockchain startup.
Q: When you thought about starting the business, did you not use the blockchain concept?
After I started thinking about entrepreneurship, I came up with the idea of services using blockchain.
Q: Do you remember when you first felt the potential of blockchain?
Of course. It was around 2015. I moved to Silicon Valley, and I was visiting offices like PayPal, Google, Facebook, etc.
Q: Does visiting an office mean “inspection?”
Yes. I wanted to see the trend with my own eyes. What is a cutting-edge technology company? At the same time, I wanted to determine the best way to settle high-value transactions such as real estate sales. I was looking for specialists to help me automate such processes. While I was following tips from my friends, I heard about blockchain from one engineer.
Q: Are you still communicating with that engineer?
Yes. That person later became a member of Propy. An expert in cybersecurity. Then, I learned about blockchain and incorporated it as I read various books. I felt that the concept of international transactions in real estate was attractive, and I felt that the concept of blockchain would grow.
Q: Did you feel concerned about quitting your career as a real estate developer?
Yes, there was a period of six months when I was very worried. But, once I started, I couldn’t go back. I had meetings with many people and consulted them about my ideas. It was time to jump.
Q: What was the biggest boost that made you decide to start the business?
It may be that I loved making something useful for people. It doesn’t have to be something visible; software and services make a difference.
Q: The desire to make something useful for people does not connect with the work that you did as a developer. Why did you choose to work as a developer?
When I went to university, I learned about Sustainability, so I wanted to help people with sustainable urban development. That was always in my head.
Q: Have you ever been frustrated or dissatisfied in this effort?
I think there is a lot of frustration in any business. What I want to say is that I didn’t start a business to get out of feeling dissatisfied. My feeling was that I am interested in buying and selling real estate abroad, but I want to create something for customers in need who are worried and anxious. The challenge seems worth it. I feel like it was.
One Path to P2P Implementation
Q: From here, I would like to move the topic related to the future of Propy. First, let’s talk about the market. With your vision of automating international real estate transactions, I feel that the size of the U.S. domestic market cannot be overlooked. What market are you interested in targeting?
We believe that the U.S. market will have a certain share. In other countries, we have partners such as Escrow Agent Japan (EAJ), so Japan is the second most important market for us. The aim is to increase the number of people who think that Propy is “easy to use” in the large markets of each country. I think that by increasing the number of such individuals, Propy will become the service of choice for international transactions.
Q: What do you think about the problem that real estate transaction regulations differ by country?
There are always three stages of real estate transactions, wherever there are laws and regulations: 1) Contracts and paperwork, 2) Settlement, and 3) Transfer of ownership.
These three steps are common in each country. To put it another way, there is a common aspect in international real estate transactions, and there is an aspect that we can recognize, so we can overcome it.
Q: One of the hottest topics among people who discuss blockchain is Peer to Peer (P2P). There’s a conversation to the effect of “P2P transactions should be realized, and governments are not necessary.” How do you feel about this?
Some people insist on a kind of utopia, but Propy has the idea that we must respect current laws and regulations.
Q: Why do you think you should respect current laws and regulations?
If you don’t respect the current law, you won’t get the support of the players who are currently participating in real estate transactions: brokers, judicial scriveners, etc. To get support from such participants is important for Propy, and that’s why we should respect the current law.
Q: Your views on blockchain seem to be different from many blockchain enthusiasts. Are your views on blockchain your personal ones, or are they your views from the perspective of the Propy CEO?
It isn’t my personal opinion. Propy isn’t a blockchain startup but a company that wants to automate international real estate transactions. As our team’s brainstorming progressed, the vision of the entire team got more clear. Furthermore, it is not just the team that has influenced Propy’s ideas. We’ve been able to mix and grow our views by flexibly incorporating the voices of our users. It’s no longer an individual idea.
Q: What will happen to the relationship between real estate and blockchain in the future?
I understand that many enthusiastic “blockchainers” are dreaming of P2P trading. Perhaps in about 20 to 50 years, technology will make that dream a reality. It’s clear that we’re moving along.
Today, smart contracts have been fully utilized, and electronic signatures have been accepted. Soon, ownership will automatically be transferred at closing. The next step for the government is acceptance. For example, the government’s responsibility will no longer be focused on registration but rather on auditing and accessing the system. The last step is to accept a digital ID. In this society, smartphones can exchange ownership between smartphones using digital IDs.
I don’t think of Propy’s current position as an individual or a single business unit. What can be said is that the use of platforms like Propy is inevitable as technology pervades society and “offline” moves online.