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- 🏠 The founder's bad decisions killed a $33M proptech dream
🏠 The founder's bad decisions killed a $33M proptech dream
How Propzy's collapse shocked the entire real estate market of Vietnam
Admond Lee
November 24, 2024
Hey Founders,
Welcome to The Runway Ventures — a weekly newsletter where I deep dive into failed startup stories to help you become the top 1% founder by learning from their mistakes with actionable insights.
Today’s story is about how a founder’s bad decisions killed his ambitious proptech startup in Vietnam. Let’s get to it! 🚀
Today at a Glance:
☠️ 1 Failed Startup → Propzy
⚠️ 2 Mistakes → Poor management & bad decisions from founder
🧠 3 Lessons Learned → Know your market damn well
🔗 The Runway Insights → How to give senior leader feedback (without getting fired)
💰 Southeast Asia Funding Radar → Oneteam secures $2.6M seed round from Wavemaker Ventures to revolutionise SME succession through employee ownership
☠️ 1 Failed Startup: Propzy
🚀 The Rise of Propzy
🇻🇳 Propzy was founded by John Le (a Vietnamese American entrepreneur) in 2016 to streamline buying, selling, and renting homes in Vietnam.
 John Le | 🫡 John Le is not your ordinary founder. He’s an accomplished Vietnamese American entrepreneur with a background in fintech and credit systems. John had previously launched successful ventures in the US like LoanTrader & Portellus. He was inspired to simplify real estate transactions in Vietnam after struggling with renting and buying properties himself. |
Propzy wasn't just another real estate website, it was a comprehensive solution to a significant problem. Why?
The Problem — 🥵 Home buyers in Vietnam often faced difficulties in navigating the complex process of purchasing a home, while sellers struggled to find reliable buyers.
The real estate market in Vietnam was notoriously fragmented and plagued with inefficiencies.
The Solution — 🏠 Propzy was a one-stop platform that provided end-to-end solutions, from property listings and transaction centres to mortgage services and software for property management.
It was an online marketplace with physical transaction centres, providing both digital listings and face-to-face support.
This hybrid model meant that customers could browse properties online while still having access to personal assistance when needed.
💟 By leveraging a hybrid online-offline model, Propzy bridged traditional real estate practices with innovative technology, addressing the trust and transparency issues that plagued Vietnam's property sector.
🏠🤝🏻 In short, Propzy wanted to make real estate transactions safer and more efficient for everyone involved.
| The problem was massive in Vietnam’s property market and investors were enthusiastic about its potential. 💰 By 2020, Propzy had raised over $33 million in funding, the 2nd largest total investment in Vietnam’s prop tech market, including a whopping $25 million Series A round led by SoftBank Ventures Asia and Gaw Capital Partners. |
At its peak, the company boasted:
1,200 employees
80,000 customers
>30 transaction centres
$1 billion in property transactions
🏠🏠🏠 With plans to grow its transaction centres from 30 to 70, increase its workforce to 1,300 within 18 months, and plans for direct mortgage lending, Propzy was hailed as an emerging giant in Vietnam’s proptech sector.
Real estate in Vietnam
It even caught the attention of major investors who believed in its potential to revolutionise the real estate market.
📉 The Fall of Propzy
🏗️ However, Propzy’s initial success didn’t last long.
Everything collapsed when the COVID-19 pandemic hit Vietnam hard in early 2020. leading to Propzy’s downfall due to prolonged periods of lockdowns and social distancing, mounting operational costs, global financial instability (i.e. Russia-Ukraine conflict) and the founder’s bad decisions.
📌 Here’s what happened to Propzy:
Our efforts to grow the business during this period resulted in absorbing significant losses that we were not able to recover from, given the continual lockdown in Vietnam,” reads Le’s email to his employees.
🏘️ The property market boom
2016 — Propzy was founded by John Le.
🤑 Business model → Collected commission of 1% from every transaction as a middleman.
2017 — The company grew rapidly with 120 employees and moved to a new office.
2018 — Employee count increased to 200 and transaction centre expanded significantly to 26.
Jun 2020 — 💰 Raised $25 million in Series A funding from SoftBank Ventures Asia and Gaw Capital Partners with amazing traction:
1,200 employees
80,000 customers
>30 transaction centres
$1 billion in property transactions
🦠 COVID-19 pandemic killed everything
2020 — 😷 The COVID-19 pandemic hit Vietnam.
The lockdowns led to a staggering 70% reduction in business as people were unable or unwilling to engage in property transactions during such uncertain times.
Even worse, global financial instability — exacerbated by events like the Russia-Ukraine conflict — proved too much for Propzy to handle.
Jun 2021 — Restructured business model due to pandemic pressures by:
🩸 Laying off 50% of sales staff
🩸 Developing new products
🩸 Dissolving its subsidiary (Propzy Services)
🩸 Closing its transaction centres temporarily
💧 Entering a new round of funding
Despite these efforts, Propzy struggled to generate sufficient revenue and faced increasing difficulties attracting new investment.
Mid 2022 — 🚨 Propzy’s negotiations for an acquisition by Singapore-based 99 Group fell through.
99 Group’s founder (Darius Cheung) said that its interest in Propzy carried “a lot of uncertainties” due to Propzy’s weak balance sheet.
12 Sep 2022 — 💀 Propzy ceased operations entirely after struggling to raise additional funding amidst an uncertain economic landscape.
An internal email from John Le revealed that despite their best efforts to adapt and grow during challenging times, they couldn’t recover from significant losses incurred during the pandemic.
He said the prolonged pandemic, global financial market instability, and the Russian war in Ukraine have contributed to his decision to close Propzy permanently.
Our inability to raise funding amidst the backdrop of an uncertain global environment was the final jab of the knife in our young startup.
🇻🇳 While Propzy’s hybrid model addressed critical pain points in Vietnam’s real estate market, its reliance on high operational costs, coupled with the pandemic’s disruptions, became unsustainable.
The fragmented and complex nature of Vietnam’s property market, combined with insufficient digital adoption, further hindered its growth.
💀 Ultimately, Propzy died because of the economic impacts of the pandemic, global instability and an inability to secure additional funding.
Want to learn more about Propzy’s downfall?
⚠️ 2 Mistakes
Mistake 1: Poor management & bad decisions from founder
According to Tran Khanh Quang (General Director of Viet An Hoa Real Estate Investment JSC) and one of the industry insiders who had followed Propzy since its early days, Propzy boasted a good model but poor execution.
In the beginning, John Le was in charge of finance, with a team of highly qualified technology and real estate staff members. However, over time, it seems that the management line in the company was no longer as clear, and the founder seemed to have made many decisions on his own.
🕺🏻 Founder-centric decisions for restructuring were unclear:
Dissolving Propzy Services and cutting 50% of the sales staff
Providing real estate financial solution service — Propzy Stay
Launching a new product line — Propzy Home
🤦🏻♂️ Despite considerable doubts from the market at the time, John insisted that all the changes were in line with the company’s new business model and strategy.
In the end, Propzy still failed to address core financial and operational challenges despite all these changes.
Mistake 2: Earned too little + spent too much
This was actually shared by Le Minh Duc (founder and CEO of Remaps) which is another proptech startup.
Its only source of income was a small commission on every successful transaction and, as its tech portion was insufficient, they were forced to bring many brokers into the same transaction to avoid risks. It is difficult for a startup to survive when the personnel apparatus becomes cumbersome.
💵 Earned too little:
Propzy’s revenue was capped at a 1% commission per transaction.
It also provided legal services with an off-contract fee if a piece of property encountered legal issues.
💸 Spent too much:
Propzy aggressively grew its workforce (1,200 employees) and infrastructure (>30 physical transaction centres), leading to high operational costs.
Despite branding itself as a tech company, Propzy’s hybrid model relied heavily on manual processes and brokers — which burned a lot of money.
When the pandemic hit, nobody wanted to view and buy properties, causing a sharp decline in revenue.
Meantime, Propzy still had to pay its fixed costs (office leases, salaries, and transaction centre maintenance) and struggled to cut expenses fast enough.
🩸 In short, Propzy’s income source wasn’t sufficient enough to sustain the high operational costs of its business.
🧠 3 Lessons Learned
Lesson 1: Founder-led doesn’t mean founder-only
As Propzy scaled, the decision-making remained overly centralised and opaque.
Founder-centric management might work for small startups, but when you're running a 1,200-person organisation, clear delegation and professional management are non-negotiable.
🌟 Key Takeaways:
🕺🏻 Hire domain experts early
For an early-stage startup, it’s okay to hire generalists.
However, as the startup grows, it’s important to hire specialists with deep expertise in certain areas to scale the company.
In Propzy’s case, they should probably hire executives with deep backgrounds and knowledge in real estate in Vietnam to complement the founder’s vision and provide fresh perspectives.
🧠 Involve leadership in pivots
When making major decisions, it’s recommended to include senior leaders in the planning and execution phases.
Their input ensures decisions are well-rounded and align with the company's long-term goals.
For example, regular strategy sessions can be scheduled where leadership teams can analyse challenges and propose data-driven solutions.
Lesson 2: Burn wisely (not wildly)
🔥 Propzy's operational model was a cash furnace.
It was too reliant on costly transaction centres and brokers while pulling in limited revenue from 1% commissions. The pandemic exposed this flaw, as revenue plummeted but costs didn't budge.
🌟 Key Takeaways:
💰 Align costs with revenue growth
Ensure your business model can support scaling expenses.
If your business needs to burn 3x to scale revenue 1x, probably you might want to reconsider the business model or cost structure.
💪🏻 Control the burn rate during uncertainty
When faced with economic challenges, cutting costs quickly can mean the difference between survival and collapse.
Identify flexible cost structures (i.e. variable leases, gig-based staff) that allow you to scale down during tough times.
For example, Airbnb responded to the pandemic by swiftly cutting 25% of its workforce and pausing non-core projects, saving cash and refocusing on its core business.
Lesson 3: Know your market damn well
John Le' was in finance and not real estate. He started Propzy after struggling to find properties in Vietnam. However, his lack of understanding of how Vietnam’s real estate industry worked led to many bad decisions down the road.
🌟 Key Takeaways:
🧐 Know the market well (or don’t touch it at all)
This is especially true for old industries like real estate and insurance.
There’s a reason why agents or brokers are still heavily involved in the entire process (value chain) despite the rise of technology.
It’s easy to attach technology and call it a tech startup to disrupt these old industries, but it’s extremely hard to gain wide adoption if you don’t fully understand how each element works.
I made the exact mistake when building my first startup (Staq) to help lenders access SMEs’ financial data using our API.
TLDR → The SME lending industry wasn’t as easy as it looked from the outside. We couldn’t crack it, and we failed after running out of money.
🙌🏻 Do you have the right to win?
There are millions of problems in the world, but are you the right founder to solve the problems?
I’ve seen many founders (I’m guilty of this) trying to solve problems that they don’t have the skills, network, or competitive advantage to solve them.
As a result, every odd is stacked against them, and they eventually died.
🔗 The Runway Insights
How to give senior leader feedback (without getting fired) (Link)
8 keys to making Meta ads work for founders (Link)
Building the next generation of hardware (Link)
The state of GenAI in the enterprise (Link)
Your guide to the 2024 SaaS benchmarks (Link)
The 4 secret ingredients of the best pitch decks (Link)
Sam Altman's 9 things that the best founders do to build a great company (Link)
💰 Southeast Asia Funding Radar
Oneteam secures $2.6M seed round from Wavemaker Ventures to revolutionise SME succession through employee ownership (Link)
Portcast, an SG-based startup, raises $6.5M Series A led by Susquehanna Asia VC to improve supply chain efficiency (Link)
DF Auto, a Malaysia-based robotics company, bags $1.85M led by Vynn Capital to fuel its expansion plans (Link)
Locad, an e-commerce logistics startup, raises $9M Pre-Series B to expand in Saudi Arabia and the United Arab Emirates (Link)
Atome Financial secures access to $200M credit facility to drive SEA expansion (Link)
Secai Marche raises $1.6M Series A to double down on Southeast Asia for its farm-to-table fulfilment platform serving farmers (Link)
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That’s all for today
Thanks for reading. I hope you enjoyed today's issue. More than that, I hope you’ve learned some actionable tips to build and grow your business.
You can always write to me by simply replying to this newsletter and we can chat.
See you again next week.
- Admond
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