After all the chatter emerging out of Midyear, there really is no shortage of topics to think and talk about. There is merely the shortage of time. But I thought this topic needs to be addressed, and I’m quite surprised none of the usual commentariat has tackled it.
At some point, we are going to have to address the issue of pocket listings and what that means for the industry, no? Let’s get started.
The narratives take shape, and start to diverge in Q1/2013.
When I began writing this report, I did not think that a mere update on quarterly results would reach over 12,000 words and require so much work. After all, the annual report is the really important one, and the quarterly reports are mere milestones along the path.
But with all of the changes going on in real estate today, it turned out that there were some really significant signs and developments in Q1 of 2013. The three companies – Move, Trulia, and Zillow – have begun to diverge from each other in not just performance, but in their overall strategic narratives. Each has made important strategic decisions and has begun to execute on them, and the first quarter of 2013 provides glimpses into what the future holds.
Move, the veteran, actually showed revitalization across the board. But it is unlikely to get much credit for its strong performance because the two upstarts outperformed Move on virtually every metric. Nonetheless, the narrative for Move has shifted subtly, but importantly. The content to connection to close story is a good one, and Q1 suggests that perhaps, that strategy is working. At the same time, there are some hints that perhaps Move is undergoing a far more fundamental change in who they are and what they do.
In the case of Trulia, of course, it isn’t merely a glimpse. With their $355M acquisition of Market Leader, Trulia has more or less set its strategic path for the next couple of years. It was a bold move, probably a necessary move, and one filled with high risk and high reward. Coming on top of an extremely strong quarter, where Trulia beat out Move handily and either outperformed or kept pace with Zillow on almost all key metrics, the acquisition sets Trulia’s strategy and narrative for the foreseeable future. If I wrote in the last report that I wasn’t sure what Trulia’s strategic vision was, well, consider that corrected. It is now obvious what Trulia’s narrative will be.
Zillow’s Q1 results and the important management discussion that followed can be described with a word: confidence. Having announced in the 2012 earnings call that Zillow plans to start heavy TV advertising to take over the “brand whitespace” that is real estate, Q1 gave us some results and some glimpses into how that is working. This is a company that knows it has the lead, knows it’s winning, and has decided to start building enduring competitive advantages. Trulia won the quarter, but it will take more than one quarter to catch up to the frontrunner, who knows he’s out front, and by quite a lot.
All of these developments will have deep strategic implications for everyone in the real estate industry, from brokers to agents to franchise companies to MLS and Associations to vendors and other technology companies. Some of the implications will be obvious, and others less so. What I have tried to do is to tease out details on the one hand, while taking a step back and looking at all three companies and their narratives to get a sense of the overall shape of things to come.
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This report is provided for informational use only, intended to assist professional investors and industry professionals. The information contained herein does not constitute investment advice and may be subject to correction, completion and amendment without notice. 7DS Associates assumes no duty to make any such corrections or updates. While the information contained herein contains opinions and projections, it is not our intention to state, indicate or imply in any manner that current or past results are indicative of potential future results. As with all investments, there are associated risks and you could lose money investing. Prior to making any investment, a prospective investor should consult with his own investment, accounting, legal and tax advisers to evaluate independently the risks, consequences and suitability of that investment. 7DS Associates disclaims any and all liability relating to any investor reliance on the accuracy of the information contained herein or relating to any omissions or errors and as such disclaims any and all losses that may result in an investment in any company mentioned in the report.
I have been asked for a recap of the events at NAR Midyear, but as I did not attend the Board of Directors meeting, and as I was busy doing other things, I felt it wasn’t really my place to give a recap.
It is, however, my place to offer some thoughts — high-level, unusual, and either prophetic or batshit crazy depending on your point of view — on what I heard, saw, felt, and read this past week. And my overall impression right now is that war within the real estate industry is inevitable. It is a question of when, not if, and how, not why.
The “why” has already been answered by the Greek historian Thucydides, who wrote:
The growth of the power of Athens, and the alarm which this inspired in Lacedaemon, made war inevitable.
Similarly, the growth of the power of the Internet, and the alarm which this inspires in various circles in real estate, makes war inevitable. While I hope to see the minimum of conflict, and will work to make peace wherever I can, at this moment, I remain darkly fearful that we will need to fight in order to resolve the only question that matters: who shall rule?
Let’s just say that Internet access where I am is shaky, at best. So I’ll try to keep this as brief as possible.
A couple of interesting things happened today at the MLS Policy Committee Meeting. I’m sure the full report will be available after Midyear, but these are my initial brief thoughts.
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For anyone who doesn’t know, which is unlikely amongst my readers, Gahlord Dewald is the Founder, CEO, and Janitor of Thoughtfaucet. He’s also one of the hosts for the Trialogues podcast.
Because we’ve been missing doing these, as Matthew Shadbolt, our dear friend and Trialogues partner, is temporarily out of commission, we decided to get together to talk about a couple of issues that Gahlord has been working on for a while. He’s one of the experts on the topic of social media, of course, but he’s also been doing a great deal of work on canonical tags and authorship tags. Both are topics that have been much in the news and discussions within real estate, because of the impact of both on SEO and on how Google would treat listing content.
Many thanks to Gahlord, and as always, thanks to you all.
-rsh
Realogy reported its Q1/2013 results last week. This report will be shorter than my full year 2012 Report, as there were not as many eye-opening revelations from either the numbers or the management commentary on results.
Nonetheless, I look at not just the publicly reported numbers, but the core operating numbers, listen in on the earnings call to find out what Wall Street and management are focusing on, and consider what they mean to the real estate brokerage industry as a whole. Until another major brokerage goes public, the only real data we have comes to us courtesy of Realogy.
If you purchased the 2012 Realogy Report, this Commentary is free to you. And if you were one of my first customers on the Trulia, Zillow, Move Report… well, then you get everything the Realogy buyers get so… this is free to you as well.
This report is provided for informational use only, intended to assist professional investors and industry professionals. The information contained herein does not constitute investment advice and may be subject to correction, completion and amendment without notice. 7DS Associates and Robert Hahn assume no duty to make any such corrections or updates. While the information contained herein contains opinions and projections, it is not our intention to state, indicate or imply in any manner that current or past results are indicative of potential future results. As with all investments, there are associated risks and you could lose money investing. Prior to making any investment, a prospective investor should consult with his own investment, accounting, legal and tax advisers to evaluate independently the risks, consequences and suitability of that investment. 7DS Associates and Robert Hahn disclaim any and all liability relating to any investor reliance on the accuracy of the information contained herein or relating to any omissions or errors and as such disclaims any and all losses that may result in an investment in any company mentioned in the report.
Not that there’s anything truly new under the sun when it comes to the old warhorse topic of listing syndication, but… something did occur to me while wading through this nugget on Inman News’ Facebook Page.
Is it possible that so much of the discussion is confused because of the word “data”?
For example, Saul Klein of Poin2 writes:
It is time for the Industry to “take back its future.” It is time to look seriously at data rights and data licensing. It is not too late.
Whatever you might think of Sauls cri de coeur, what came to my mind was… we’re using the language of industries like music and retail to describe something that is fundamentally different, no?
For example, WalMart collects all sorts of data about its customers. It uses that data for massive analytics to make decisions that drive billions of dollars in sales. It protects that proprietary data in heavily fortified data centers, and it does not share the data with anybody (as far as I know). There are tons of companies whose business involves the collection of data, which they then sell to various customers.
Actual content companies — book publishers, music companies, Hollywood, etc. — create stuff that people will pay to read/hear/watch. I suppose a book is “data” in a sense, since it’s all digital bits and bytes living in the Cloud these days, and yeah, violating the copyright of a publisher is a no-no.
But when it comes to “listing data”, aren’t we talking about advertisements?
I mean, yes, just because something is an ad doesn’t mean copyright law doesn’t apply. Of course it does. I recognize that the brokers or the MLS or the photographer or whoever created the listing owns copyright, has data rights, can license those rights, and so on and so forth. There’s no legal difference between a listing and a retail point-of-sale data stream.
But isn’t there a practical difference?
“Listing data”, after all, is the advertisement of a property for sale. The broker owns the copyrightable parts of it, yes, but… should we completely ignore the fact that if the property were not for sale, the actual sellers would never have consented to the creation of the “listing data package” in the first place? As far as the seller is concerned, the “listing data” exists for the sole purpose of selling his damn house.
Which means that the issue of “listing data rights” and “listing data licensing” ought to be rephrased as “advertisements of homes for sale rights” and “advertisements of homes for sale licensing” for the purpose of precision. If those more precise terms sound faintly ridiculous… there’s probably a reason for that.
When I think in those terms, the whole syndication thing isn’t about data rights or data licensing at all, but about effective and ineffective advertising. If channel X or method Y is effective advertising, helping the seller achieve the purpose for which the “listing data” was created in the first place (i.e., sell the house), then… well, what is the problem here? If channel Z or method Q is ineffective, then by all means, stop.
The listing agent or broker can explain to the seller why she chose not to use XYZ website or method. As long as the seller is cool with it, all is good.
Consider this:
Seller: “Hey, I really want you to send singing telegrams about my house.”
Agent: “Yeah, that’s like a really great idea, said nobody ever, and I would never waste time and money on something so stupid.”
Seller: “Oh, okay, sorry. You’re the expert.”
vs.
Seller: “Hey, I really want you to send singing telegrams about my house.”
Agent: “Well, I don’t want to have singing telegram companies making money off of my listing data, and they haven’t executed the proper listing data license with me.”
Seller: “What the hell are you talking about?”
When I consider the fact that “listing data” is actually an advertisement of a property for sale, created by people who are supposedly fiduciaries of the seller, who were given the right to create that “data” for the sole purpose of effecting the sale of the seller’s property, the whole notion of “data licensing” starts to smell.
The whole “I can’t stand that Zillow is making money off my listing” thing is… sort of incomprehensible. The seller didn’t allow you to list his home so that you can generate a bunch of leads or worry about which advertising companies are making money and how. He allowed you to list his home — and to create the advertising “data” about it — so you can sell his home quickly and efficiently.
So once again, I return to my original advice on the topic:
If you don’t like using singing telegrams, don’t use it to advertise the listing. If you don’t like printing gorgeous 4-color books, don’t do it. If you don’t like doing open houses, by all means, don’t do them. And if If you don’t like ZTR, don’t advertise there.
Why so complicated? It could be because of the terminology: “listing data”.
Confusion arises from imprecision. Words matter.
-rsh
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So… I’ve decided to start doing podcasts. Because it’s fun, it allows me to get really in-depth on some topics without having to write 50,000 word posts, and because some things (like interviewing cool and interesting people doing cool and interesting things, or arguing about some topic or another) are easier on audio than with the written word.
I first did this when I interviewed Brian Copeland for his NAR Code of Ethics campaign. Well, I bring you an interview with a young technology entrepreneur who is doing some interesting things. My plan is to get really in-depth, with each episode probably lasting an hour or so. That kind of time allows all sorts of issues to be explored,
Krishna Malyala is the Co-Founder of TLCEngine. They’re trying to change the whole culture of how people search for homes and think about buying homes. Take a listen by clicking above, and leave any comments below. (I’ll look into the whole iTunes thing too so you can subscribe if you’d like.)
TLCEngine is pre-launch, so this video is probably the only thing out there right now. He goes into more depth about his system:
Many thanks to Krishna for being willing to endure the friendly-but-tough grilling that’s sort of my modus operandi. Since this is a new effort, the sound quality is not going to be a professional-caliber thing. If y’all like this podcast thing, maybe I’ll look into improving the production values.
Thanks!
-rsh
Above is the presentation I gave at Stefan Swanepoel’s T3 Summit in Las Vegas this past week. I had a great time researching and preparing it, and there is a thread over on Facebook (courtesy of Michael McClure, who used my presentation to showcase how to generate online buzz) discussing the three black swans.
But I thought I would add a few additional words.
First of all, I know there’s cool Q1 news out there and coming soon from companies I’m keeping track of. But I’m at the T3 Summit today, so look for the Q1 updates next week.
In the meantime, I thought I would take notice of something… a bit odd.