We may well groan, but irritating middlemen are here to stay
We can finally cut out the greedy bankers out of the deal. We won’t ever have to listen to a used-car dealer trying to hustle us into buying an old banger that is about to fall apart. And we won’t have to try and decode an estate agent’s blurb to work out that the delightful scenic property with idyllic country views was actually right next to the M5, had a leaky roof, and flooded every time there was anything more than a slight rain shower.
The internet promised us many things. But one of the greatest prizes was getting rid of the middlemen that had been driving us all crazy.
Cazoo had been planning to make the car dealer nothing more than a bad memory, but now its share price has crashed and it is laying off staff. Purplebricks, which was meant to transform the way we buy and sell homes, has put itself up for sale. And the peer-to-peer lenders have long since worked out that the only way they can survive is to turn themselves back into something that looks exactly like, er, a bank.
The middlemen are a lot more useful that the tech disruptors realised. They know the market, and they know where the customers are and how much they will pay. And those skills will still be valuable for a long time to come.
When it listed its shares in New York in 2021, reversing into a Special Purpose Acquisition Vehicle, Cazoo had a market value of $1 billion. The used car company was on a roll, expanding across Europe, and promising to transform the way we buy and sell cars.
There was an opportunity there. Very few of us buy a car brand new – more than 7m used vehicles are sold in the UK every year, compared to 1.7m new ones – and the experience is often bewildering. Plenty of us have driven away from the forecourt wondering if we have been ripped off, and later found that we have been.
And yet, only two years later, the company is in a sorry state. The shares have dropped by 95pc over the last 12 months, and this week it announced that it would have to raise fresh cash simply to stay alive.
It is far from alone. Purplebricks should be good at selling stuff, even if it is a bit ropey, but the UK’s leading online estate agency put itself on the market last month and, as one of its agents might put it, is ‘still taking viewings’.
The shares are down by 70pc over the last year as the company has struggled to make any money. It turned out that we like the old-style, traditional estate agents after all, even if they get on our nerves occasionally.
Likewise, rewind a few years and the pioneers of peer-to-peer finance, such as Zopa and Funding Circle, which aimed to cut out the bankers and connect lenders and borrowers directly, have stopped taking retail deposits, and turned themselves into something that looks very like a bank.