Brace for the Bruces

In June 2022, a relatively innocuous company – My Bespoke Room Business Ltd – was incorporated, one that would become central to an administrator’s investigation around the potential transfer of millions of pounds of intellectual property (IP) from a business that failed a few months later, into the control of that business’s CEO: Michael Bruce.

Let’s go back a few years, to lockdown-laced April 2020. The Bruce Bros – Michael and Kenny – are setting up a new company called Boomin. Their pitch to traditional agents is that they’re going to create an alternative portal to Rightmove with genuinely different user experiences – these include Secret Property, ChainMaker MortgageMaker, MatchMaker and Property Playground, all of which will require distinct and complex technical builds costing tens of millions of pounds.

The Bruce Bros – lest we forget – were the guys that launched Purplebricks in 2014. They went hard – so hard – on ‘Commisery’, a feeling they claimed people experienced when they realised that estate agents were ‘overcharging’ them.

These relentless campaigns, fuelled by investor millions, led to thousands of agents decreasing their prices simply to salvage business. In tandem with Rightmove – which throttled every agent’s ability to make themselves distinctive by presenting each with the same number of pixels for a tiny logo, the same number of characters for their company description, and so on – Purplebricks pretended that other estate agents were an amorphous mass of devious sameness and they were the difference.

The Bruces made huge personal fortunes from this industry-savaging. Purplebricks raised a total of £197m. Most was spent on marketing – it became clear that the second this was turned off, their instructions collapsed – and on subsidising the operational side. It is demonstrably true that you cannot maximise the value of a home, advertise as widely as you should, negotiate with many potential applicants and plough through insufferable sales progression for the fee that they were charging upfront, £1,000. It was only investor cash and dodgy review generation that allowed them to pretend to sellers that this might be possible.

£197,000,000 of that investor cash later, Purplebricks sold for £1. In 2023, the artist formerly known as HouseSimple – now called Strike – acquired the brand and promptly went on an eye-popping spree of offering every PB sale of a property for free. Not £1,000 – free.

How do you think that turned out?

Losses at Strike ballooned to -£31m last year and the free service was quietly dropped. The main shareholder, Sir Charles Dunstone, said in 2015 that he intended to do to estate agents what Uber did to black cabs. 11 years later – and multiple millions of his own money invested in this crusade – he has not achieved this. Yet.

When things got even worse at Strike (now completely rebranded as Purplebricks) – requiring a note on their accounts last month to say that they may not be able to continue as a going concern – Sir C decided that he might finally listen to the siren voices from those that had proven in the past to have made money from PB, even if just for themselves.

At roughly the same time, Michael Bruce was instructed to pay £60,000 for Boomin’s tech – the tech that he had moved into his new entity sometime between June 2022 (the announcement of Boomin’s acquisition of a separate company called My Bespoke Room) and October 2022 (when Boomin went into administration). The administrators – BK Plus – were so concerned about this transaction that they hired a punchy City law firm, Squire Patton Boggs, to do some forensic investigation into it. The £60,000 – with £20,000 payable over each of three years – was agreed without prejudice, with no liability admitted, but a clear indication that the IP transfer of tech assets was not paid in full at the time.

But, four years on, does it matter?

Perhaps to the 158 creditors who are picking over the £10,000 of assets that, according to the administrators, are left - now bolstered by Bruce’s (very) belated £60k payment for the millions of pounds of tech, for sure, but still pennies compared with what they believed they would be getting when The Bros first pitched them.

Perhaps to the 74 members of staff that are still waiting for £800k in redundancy payments, who worked hard to build this tech, who believed in the mission and aren’t going to see the benefit of it.

And perhaps, too, to the future customers of Purplebricks, should they be dazzled with the promise of some unique technology to market their homes – but only if they pay upfront for a service that has been repeatedly shown to require subsidisation if it's to operate at the level claimed.

And finally, perhaps it also matters to an industry that has seen this movie before. Estate agents know that the only way Michael and Kenny Bruce got their millions was from unloading £197m on their reputations. Wave after wave of ‘commisery’ ads smashing home a message of traditional agents as money-grabbing con-artists, lining their own pockets at the expense of homesellers.

But The Bros can’t possibly convince investors to back them a third time … can they? After a quarter of a billion has gone up in smoke on their previous two ventures? Well, it looks like Sir Charles is in. That fact alone might be enough to convince some of his well-heeled City chums to throw some of their stash into the pot. The sequencing of the announcement that Michael and his bro are back at the ‘Bricks – six weeks after he finally secured the IP from the Boomin administrators – suggests that this has been planned long ago. Perhaps even as far back as the creation of My Bespoke Room Business Limited in 2022?

As the industry braces for the Bruces once more, it’s worth thinking hard now about how traditional agents can convey their value proposition quickly, effectively and relentlessly. Because this is not an overnight decision of The Bros to come back – and what they are plotting to unleash is already priced in.