To Hunt Elephants, You Need An Elephant Gun

You mean MLS does not stand for Massive Large Shotgun?

You mean MLS does not stand for Massive Large Shotgun?

The conversations continue. It appears there are a whole bunch of folks who want to talk about the future of listings. And rightfully so — listings are important to the modern practice of real estate.

The latest salvo marks the return of David Harris of Geek Estate to blogging, and it’s a good one. Read the whole thing.

David begins with a brief overview of the major points over the past couple of years on what the “MLS of the Future” might look like. Then he points out a very important fact — what he calls the “elephant in the room”:

The “MLS” exists for the benefit of its dues paying members, drifting from that core concept will get you confused with the Zillow / Trulia gang (an exciting party until the money runs out).

And those dues paying members want what? To make more money faster by using the MLS. And if you look at it from that perspective, almost everything from listing data quality, system security/reliability, IDX, etc either play to the speed or value aspect.

This is, in a way, an important fact that has been somewhat overlooked in all the futurism talk — including, by me: an “MLS” has to make money.

It seems so obvious now that David has mentioned it, but I’m sorry to say I overlooked the whole thing in my enthusiasm for and starry-eyed vision for some MLS of the Future.  He’s right — an MLS exists because people think the service it provides is valuable.  They express that value through their wallets — they pay for it.  David calls it “dues” but generically speaking, it’s a subscription fee of some sort.

The rest of David’s post is concerned with the speed/value question, and thoughts on what features and benefits the MLS of the Future (hereafter, “MOF“) could offer.  I will take things in a different direction, by looking at the implications of “must provide value to subscribers”.

The MOF Will Be A Monopoly

Once I start thinking about money, the elephant in the room, I am more convinced than ever that the MOF will be a monopoly or an oligopoly.  Either we will have a single national MLS operated by a single entity (e.g., FBI fingerprint database), or we will have a national system comprised of two or three major players (e.g., NYSE, NASDAQ, CBOT).

The reason is economies of scale.

Technology development is very expensive. Even the most seemingly trivial feature could take weeks or months of expensive developer time to make reality. You may need to hire dozens of developers, software and hardware engineers, systems architects, and all the support staff to keep them productive and happy. But creating technology is in some ways the easier task.

Since the MOF like any MLS is financed primarily through subscription fees, and the subscribers see value in terms of “help me make money faster”, the MOF has to continually invest in technology to help its subscribers make money faster.  Note that this precise business relationship is what a number of subscription based “web tools vendors” have with their subscribers.  If an MLS does not invest, because of a lack of funds or lack of skill or lack of will, someone else will.

Today, each “MLS ” is simply far too small to sustain the sort of technology development necessary for breakthroughs.  Even a large and powerful MLS such as HAR only has about 25,000 members.  Given that revenue base, even HAR is limited on how much it can invest into new innovations.

Bigger markets means bigger budgets means bigger cigars

Bigger budgets mean bigger cigars

A monopolistic or oligopolistic MOF, however, that specifically intends to capture the entire national market has a much larger pool of “buyers”.  Its market is simply larger, and can justify and sustain a larger investment into the product.  Spending $25m on a new social-networking feature is much easier if your customer base is 500,000 realtors in all 50 states, vs. 25,000 realtors in one state.  It’s the difference between having to charge each subscriber $50 or $1,000 for the feature.

While it is important to recognize that rulemaking is a key value to some of the participants at an MLS, as David wrote, I don’t believe the politicking, sitting on boards and committees, and writing up rules is as high up on the value chain as “make more money faster” for most of the members.  Even if a hardcore cadre of realtors want to preserve the local independent MLS for the sake of controlling the local market, the MOF will simply take all of their non-political (meaning, not interested in association/MLS governance) realtors away by offering a superior product/service at a far lower price point.

We already see examples of this.  Trulia, Zillow, HomeGain, Roost, Estately, and others roll out innovative UI, innovations in search, innovative tools (like the iPhone search tool), that individual MLSes simply cannot.  Because those companies have a much larger market base than a local MLS with 350 members, they can afford to hire the engineers, to buy the big servers, and to put in the time to develop cool new tools.

Barring government interference (which is unfortunately far too real in our industry), it is simply a matter of economic law that the MOF will be large, national in scope, and be one to three major companies that provide the highest caliber of tools and service to every realtor in the country.  I personally believe it will be three players, simply because so many other data-driven industries seem to top out at three, maybe four, big players.  For example, credit reporting (Experian, Equifax, and Trans-Union), or title insurance (First American, Fidelity, LandAmerica), etc.  They all compete, but also cooperate in many ways to form a single industry.

A corollary effect will be that the local MLS as we know them today will go away.  They may become regional interest groups, social networks, business referral networks, etc. within the larger MOF construct that provides the data, the technology, and the tools.  But the laws of economics dictate that the small, low-value, low-investment organizations must give way to large, high-value, high-investment groups.

MOF Will Be A Company, Not a Membership Organization

I further believe that the MOF will not be a membership organization, like NAR, or a local Realtor association.  Rather, it will be a company — either for-profit or a nonprofit — but a company, run like a company with executive management, salaried staff, and customers.  The reason is that you must have executive power in order to cope with the challenges of providing a technology-based solution to a wide base of subscribers.

On my command, unlease social networking!

On my command, unleash social networking!

Committees are great for some things, but for getting things done quickly, for being nimble, they’re probably not the vehicle you want to choose.  You need leadership that is able to get things done — cajoling and politicking with hundreds of thousands of individual members is simply too unwieldy.

The company may be nonprofit, and may be owned by a membership organization, such as NAR.  But it cannot be run like one if it is to be successful.  Any wannabe MOF that is run as a collective will soon have its head handed to it by the competitors who can make decisions faster, bring products to market faster, and execute on strategies faster.

The example of OSCRE in commercial real estate and RETS in residential are provocative here, especially as compared to industries where a standard arose because of a single dominant company that satisfied the needs of a huge base of customers.  Although both OSCRE and RETS are doing some good work, even those deeply involved with both “membership-driven” programs will admit that oftentimes, it’s taking two steps forward, and one back — and sometimes, two steps back.  After years and years of work, consultations, working group meetings, and the like, both commercial and residential real estate industries still do not have a single common standard.

In contrast, after a period of competition, Microsoft Word has become a de facto standard for electronic documentation.  Word processing software must provide a way to save in Word format, or face rejection by the marketplace.  Most of them must offer a way to read the popular Word formats, such as Word 97/2003, or face rejection by the marketplace.

It is possible to contemplate a situation in which a company like Move, Inc. ends up becoming more important as a MOF than as a consumer portal, simply because they provide value to its national customer base, and provide a single, working data standard.  You can easily substitute Trulia, Zillow, HomeGain, or Realogy, or Re/Max, or whoever else for Move in that previous sentence.

An enterprise MOF must, of course, continue to work with the industry — it is, after all, providing a service to members of the real estate industry.  Microsoft is involved with all manner of industry groups, for example.  But there is a substantial difference between an organization with a CEO who can make decisions and move things forward, and a membership group that needs to convince at least a majority of its members to do X, Y, or Z.

Big Guns for Big Game

The issue of data standardization, of providing value to real estate professionals who work in a highly competitive industry themselves, of creating and maintaining technology that makes processes more efficient and provides useful consumer benefit — these things are all major tasks and major challenges.  They cannot be solved adequately by amateurs playing at “working it out”.

It will require the vision, the dedication, and the hard work of professionals working to get paid, to make a profit, by satisfying the needs of as many realtor customers as possible to bring about the MLS of the Future.  Because of money, the elephant in the room.

And when you go to hunt the elephant, you do not bring a .22 with you.  You bring the big gun.

-rsh

  • brandcandid

    Mr. Notorious,
    Nice post…lot’s of brain power, thanks for sit’n & think’n. I’ve been in this odd biz for 30yrs. I remember MLS books…computer was’t a work in the dictionary. We had no iPhone or cell phone…back then the only guy with a cell phone was Maxwell Smart….the concept was comedy. We had mimeograph machines, not color copiers/scanners/faxe/email machines….who knew?

    So, no doubt, your scenario or something like it…what ever it is, it won’t be what we see now.

    Rock ON rob.

  • brandcandid

    Mr. Notorious,
    Nice post…lot’s of brain power, thanks for sit’n & think’n. I’ve been in this odd biz for 30yrs. I remember MLS books…computer was’t a work in the dictionary. We had no iPhone or cell phone…back then the only guy with a cell phone was Maxwell Smart….the concept was comedy. We had mimeograph machines, not color copiers/scanners/faxe/email machines….who knew?

    So, no doubt, your scenario or something like it…what ever it is, it won’t be what we see now.

    Rock ON rob.

  • http://www.LarsonSobotka.com/ Brian Larson

    Instead of Bringing a Big Gun, be Small and Infectious

    Rob,
    I don’t know if, as you predict, a monopolistic national MOF or an oligopoly of national MOFs will arise, but I take issue for your premise of why it has to or should.

    It is by no means a fact that only large players can innovate. In fact, I think you can look around and see just the opposite. Large companies lack the nimbleness of smaller ones, and their costs for development can actually be higher. For example, I am familiar with a Fortune 100, publicly traded company that has just scrapped a software technology project designed to ‘harmonize’ its internal systems. After four years, 1/2 billion (that’s Billion with a B) dollars, and not a single piece of the software in production, management at this company decided to start over. No one was even fired as a result, because the project was the responsibility of a “steering committee” of executives within the corporation. A small company could never have afforded this kind of stupidity, nor could the responsbility have been so easily hidden in the corporate bureaucracy.

    Arguing that the MOF has to be really big is also like arguing that only large brokerage firms will survive in the industry. Many medium and smaller brokerages are proving quite profitable (or were until the market tanked) just doing real estate brokerage, while much bigger firms talk about brokerage as a ‘loss leader’ for ancillary services like mortage and title. How can smaller firms be making money on each brokerage transaction, while big firms are losing it? Sounds like an inverse economy of scale to me.

    On the question of economies of scale and efficiencies, I offer another example from the MLS environment. I have an MLS client that has fewer than 3,000 agents subscribing to it. It is adjacent to an MLS that has more than 30,000 agents subscribing to it. One of these MLSs charges FOUR TIMES the fees the other one charges… (imagine here the now-cliche sound effect of a needle being drawn across a record on a turntable) THE LARGER MLS CHARGES MORE. Why? Because it has neither competition nor any fear of competition. The smaller one, beset on all sides by bigger organizations, supplies a comparable range of services, including technology services, which it purchases from a competitive marketplace of national technology vendors.

    I believe if we can get folks to settle on a standard like RETS (as Mike Wurzer has compellingly argued), and open the ‘valves’ to let the data flow (as the NAR/DOJ VOW settlement is inclined to do), it is the small and medium-sized players who will innovate us into the next generation.

    I’m reminded of the Disney classic the Sword in the Stone. The wizard Merlin challenges the witch Madame Mim to a magical duel. They change into all sorts of animals, each attempting to overcome the other. Finally, Mim cheats and transforms into a dragon (breaking the rules of the dual); she thinks she has found the ‘big gun.’ Merlin transforms into a germ, making Mim sick and winning the duel.

    I think the lowly little germ will prevail over the big gun much of the time.

    -Brian

  • http://www.LarsonSobotka.com Brian Larson

    Instead of Bringing a Big Gun, be Small and Infectious

    Rob,
    I don’t know if, as you predict, a monopolistic national MOF or an oligopoly of national MOFs will arise, but I take issue for your premise of why it has to or should.

    It is by no means a fact that only large players can innovate. In fact, I think you can look around and see just the opposite. Large companies lack the nimbleness of smaller ones, and their costs for development can actually be higher. For example, I am familiar with a Fortune 100, publicly traded company that has just scrapped a software technology project designed to ‘harmonize’ its internal systems. After four years, 1/2 billion (that’s Billion with a B) dollars, and not a single piece of the software in production, management at this company decided to start over. No one was even fired as a result, because the project was the responsibility of a “steering committee” of executives within the corporation. A small company could never have afforded this kind of stupidity, nor could the responsbility have been so easily hidden in the corporate bureaucracy.

    Arguing that the MOF has to be really big is also like arguing that only large brokerage firms will survive in the industry. Many medium and smaller brokerages are proving quite profitable (or were until the market tanked) just doing real estate brokerage, while much bigger firms talk about brokerage as a ‘loss leader’ for ancillary services like mortage and title. How can smaller firms be making money on each brokerage transaction, while big firms are losing it? Sounds like an inverse economy of scale to me.

    On the question of economies of scale and efficiencies, I offer another example from the MLS environment. I have an MLS client that has fewer than 3,000 agents subscribing to it. It is adjacent to an MLS that has more than 30,000 agents subscribing to it. One of these MLSs charges FOUR TIMES the fees the other one charges… (imagine here the now-cliche sound effect of a needle being drawn across a record on a turntable) THE LARGER MLS CHARGES MORE. Why? Because it has neither competition nor any fear of competition. The smaller one, beset on all sides by bigger organizations, supplies a comparable range of services, including technology services, which it purchases from a competitive marketplace of national technology vendors.

    I believe if we can get folks to settle on a standard like RETS (as Mike Wurzer has compellingly argued), and open the ‘valves’ to let the data flow (as the NAR/DOJ VOW settlement is inclined to do), it is the small and medium-sized players who will innovate us into the next generation.

    I’m reminded of the Disney classic the Sword in the Stone. The wizard Merlin challenges the witch Madame Mim to a magical duel. They change into all sorts of animals, each attempting to overcome the other. Finally, Mim cheats and transforms into a dragon (breaking the rules of the dual); she thinks she has found the ‘big gun.’ Merlin transforms into a germ, making Mim sick and winning the duel.

    I think the lowly little germ will prevail over the big gun much of the time.

    -Brian

  • http://www.adrhi.com/ Jeff in Hawaii

    Great article! I am in the camp that is for a national MLS. I agree that if you had a larger entity handling the data from every board it would simply things a lot. More money to get the data organized and one data feed for the different IDX real estate website developers. Then they can spend their time and resources creating new better solutions for agent websites.

    Everyone is talking that a new RETS standard will save the day and make things easier. The major problem is that the RETS standard is pretty loose.

    I always thought that all these boards and comities were a waste of time and resources.

  • http://www.adrhi.com Jeff in Hawaii

    Great article! I am in the camp that is for a national MLS. I agree that if you had a larger entity handling the data from every board it would simply things a lot. More money to get the data organized and one data feed for the different IDX real estate website developers. Then they can spend their time and resources creating new better solutions for agent websites.

    Everyone is talking that a new RETS standard will save the day and make things easier. The major problem is that the RETS standard is pretty loose.

    I always thought that all these boards and comities were a waste of time and resources.

  • http://robhahn.wordpress.com/ -Rob

    @Brian –

    First of all, kudos for just a wonderful set of observations. Indeed, that should be a blog post in and of itself. What a fantastic comment, sir.

    Having said that, I am now going to disagree with you on a few points. :)

    It is by no means a fact that only large players can innovate.

    If innovation were the key, then you would be absolutely correct. But I don’t believe that innovation is the key when it comes to the MOF or anything that requires a large footprint to work. Execution is.

    The classic example is Betamax. Despite being more innovative than VHS, it failed to gain traction because of missteps in marketing, adoption, and partnership formation. Or compare Microsoft vs. Apple.

    Because what we are talking about is existing business practice — putting in property data into a database, then distributing it — we’re not talking about disruptive technology that no one could imagine. The classic tale of the “little guy” taking on the Big Corp and winning is almost always based on some disruptive technology that no one took seriously at the time. The reason for Microsoft’s success was that IBM’s people never thought in a million years that the Personal Computer would take off. It took a web search company to finally threaten Microsoft’s dominance in desktop software, because the Microsoft people didn’t see the threat until it was almost too late.

    A National MLS is hardly a new, disruptive, innovative idea that no one in the industry has thought about. If anything, thousands of people have thought about it — we just haven’t had the will, the leadership, to do something about that.

    Furthermore, if you pick a moronic badly run company as the counterexample, I can only agree. Any small company will run rings around Big Dinobot staffed with Mr. Steering Committee Members. But assuming for the moment that both companies are run relatively professionally, the resource advantage will most definitely come into play.

    Give me $50m and a staff of 200; you take $500,000 and a staff of 4. Chances are, I’m going to have a better initial product than you. Even if your team of 4 work around the clock, innovate like mad, and create a better initial product, my guys will reverse engineer your stuff and have a copy out in the marketplace within 90 days. Then, I will release new features every six weeks, while running consumer focus groups, usability testing, and deploying a larger, better-trained sales force.

    Lest you want to consider Trulia and Zillow as “little nimble guys”, may I point out that their funding is many times larger than the technology budgets of the biggest of the big brokerages? They’re not so little in terms of resources spent.

    The kind of “little guy” MLS of the Future you’re thinking of, the one where the small, nimble, brilliant bunch of kids in a garage develop something so innovative that the Big Dinobots can’t cope with… you know what? When that MOF comes out, none of us will even recognize it as an MLS, nevermind the MLS of the Future. We simply can’t even conceive of it. Just like if you asked Ezra Cornell of Western Union in 1861, when they laid the first transcontinental telegraph line and held a monopoly in communications, what the Telegraph of the Future would look like, I really doubt Ezra would have answered, “Twitter”.

    On the question of economies of scale and efficiencies, I offer another example from the MLS environment.

    That’s a very interesting story. But as your story illustrates, here we have a case of two MLSes, both of which offer comparable services, including technology, which both presumably buy from the same set of national vendors. But one of them is 10 times larger. It’s a wonder that they only charge 4 times the price of the tinyMLS.

    This is a classic case of the network effect. Considering that the whole value of a MLS to a subscriber is access to buyers and sellers via the other agents who are subscribers… I suspect that tinyMLS will soon be driven out of business, unless it comes up with something super-special that the BigMLS does not have. I mean… I really don’t care how nimble and smart your executive team is — I am not funding an online auction play against Ebay unless you can show me how you’re going to overcome the enormous network effect of Ebay.

    I believe if we can get folks to settle on a standard like RETS (as Mike Wurzer has compellingly argued), and open the ‘valves’ to let the data flow (as the NAR/DOJ VOW settlement is inclined to do), it is the small and medium-sized players who will innovate us into the next generation.

    Now, as it were, I happen to agree with you 100%. Once the data issues can get resolved, then I do think it may be the smaller guys who create the true killer app of the next generation.

    My point, however, is that that company will not remain small for long. Competition will see to it. That small company can be the winner, with the winning product full of innovative value, in which case it will continually grow, adding subscribers, until it expands outside its initial market, first into the regional, then ultimately into the national market. And one day, its CEO will look around and go, “Jesus, when did we hire employee #3,000?” Or, it will not be the winner, in which case some other company will grow, add business, and ultimately come knocking with offers to buy out the shareholders, and it will become part of a large company. Either way, the MOF will be a Big Company.

    Of course… if the industry never settles down on a common data standard… then I believe one will be imposed on us by a single large company that has created a compelling product, executed its plans, and acquired enough critical mass of customers. That will be the Microsoft model.

    I really did like that movie, by the way, Sword in the Stone. :) In the real world, however, Russia beats Georgia. Every. Single. Time.

    -rsh

  • http://robhahn.wordpress.com -Rob

    @Brian –

    First of all, kudos for just a wonderful set of observations. Indeed, that should be a blog post in and of itself. What a fantastic comment, sir.

    Having said that, I am now going to disagree with you on a few points. :)

    It is by no means a fact that only large players can innovate.

    If innovation were the key, then you would be absolutely correct. But I don’t believe that innovation is the key when it comes to the MOF or anything that requires a large footprint to work. Execution is.

    The classic example is Betamax. Despite being more innovative than VHS, it failed to gain traction because of missteps in marketing, adoption, and partnership formation. Or compare Microsoft vs. Apple.

    Because what we are talking about is existing business practice — putting in property data into a database, then distributing it — we’re not talking about disruptive technology that no one could imagine. The classic tale of the “little guy” taking on the Big Corp and winning is almost always based on some disruptive technology that no one took seriously at the time. The reason for Microsoft’s success was that IBM’s people never thought in a million years that the Personal Computer would take off. It took a web search company to finally threaten Microsoft’s dominance in desktop software, because the Microsoft people didn’t see the threat until it was almost too late.

    A National MLS is hardly a new, disruptive, innovative idea that no one in the industry has thought about. If anything, thousands of people have thought about it — we just haven’t had the will, the leadership, to do something about that.

    Furthermore, if you pick a moronic badly run company as the counterexample, I can only agree. Any small company will run rings around Big Dinobot staffed with Mr. Steering Committee Members. But assuming for the moment that both companies are run relatively professionally, the resource advantage will most definitely come into play.

    Give me $50m and a staff of 200; you take $500,000 and a staff of 4. Chances are, I’m going to have a better initial product than you. Even if your team of 4 work around the clock, innovate like mad, and create a better initial product, my guys will reverse engineer your stuff and have a copy out in the marketplace within 90 days. Then, I will release new features every six weeks, while running consumer focus groups, usability testing, and deploying a larger, better-trained sales force.

    Lest you want to consider Trulia and Zillow as “little nimble guys”, may I point out that their funding is many times larger than the technology budgets of the biggest of the big brokerages? They’re not so little in terms of resources spent.

    The kind of “little guy” MLS of the Future you’re thinking of, the one where the small, nimble, brilliant bunch of kids in a garage develop something so innovative that the Big Dinobots can’t cope with… you know what? When that MOF comes out, none of us will even recognize it as an MLS, nevermind the MLS of the Future. We simply can’t even conceive of it. Just like if you asked Ezra Cornell of Western Union in 1861, when they laid the first transcontinental telegraph line and held a monopoly in communications, what the Telegraph of the Future would look like, I really doubt Ezra would have answered, “Twitter”.

    On the question of economies of scale and efficiencies, I offer another example from the MLS environment.

    That’s a very interesting story. But as your story illustrates, here we have a case of two MLSes, both of which offer comparable services, including technology, which both presumably buy from the same set of national vendors. But one of them is 10 times larger. It’s a wonder that they only charge 4 times the price of the tinyMLS.

    This is a classic case of the network effect. Considering that the whole value of a MLS to a subscriber is access to buyers and sellers via the other agents who are subscribers… I suspect that tinyMLS will soon be driven out of business, unless it comes up with something super-special that the BigMLS does not have. I mean… I really don’t care how nimble and smart your executive team is — I am not funding an online auction play against Ebay unless you can show me how you’re going to overcome the enormous network effect of Ebay.

    I believe if we can get folks to settle on a standard like RETS (as Mike Wurzer has compellingly argued), and open the ‘valves’ to let the data flow (as the NAR/DOJ VOW settlement is inclined to do), it is the small and medium-sized players who will innovate us into the next generation.

    Now, as it were, I happen to agree with you 100%. Once the data issues can get resolved, then I do think it may be the smaller guys who create the true killer app of the next generation.

    My point, however, is that that company will not remain small for long. Competition will see to it. That small company can be the winner, with the winning product full of innovative value, in which case it will continually grow, adding subscribers, until it expands outside its initial market, first into the regional, then ultimately into the national market. And one day, its CEO will look around and go, “Jesus, when did we hire employee #3,000?” Or, it will not be the winner, in which case some other company will grow, add business, and ultimately come knocking with offers to buy out the shareholders, and it will become part of a large company. Either way, the MOF will be a Big Company.

    Of course… if the industry never settles down on a common data standard… then I believe one will be imposed on us by a single large company that has created a compelling product, executed its plans, and acquired enough critical mass of customers. That will be the Microsoft model.

    I really did like that movie, by the way, Sword in the Stone. :) In the real world, however, Russia beats Georgia. Every. Single. Time.

    -rsh

  • http://www.dennispeaseteam.com/eugene-oregon-real-estate.php Eugene Homes

    Rob, that is very thought provoking. No doubt there is a lot of talk of a National MLS or Open MLS. Many of us hate to see change but it is going to happen and as you mentioned, once in place agents will change to a more powerful MLS and pay lower fees.

    You presented this scenario in a very clear manner that actually makes sense and is more than likely very close to what our MOF will be.

  • http://www.dennispeaseteam.com/eugene-oregon-real-estate.php Eugene Homes

    Rob, that is very thought provoking. No doubt there is a lot of talk of a National MLS or Open MLS. Many of us hate to see change but it is going to happen and as you mentioned, once in place agents will change to a more powerful MLS and pay lower fees.

    You presented this scenario in a very clear manner that actually makes sense and is more than likely very close to what our MOF will be.

  • Adrian Sherwood

    Rob,

    An elephant gun is not needed. A unified communications system can overcome economies of scale AND big money.Here’s how:
    1. Combine communications in four areas (marketing, prospecting, CRM, lead management)
    2. Build a platform that allows a single agent to master/utilize that platform from anywhere on the planet
    3. Make it possible for agents to deliver their services across the globe in 60 seconds

    This platform accomplishes three key goals:
    1. Increases agents value
    2. Lowers operational/implementation costs
    3. High Tech and High Touch become a single entity

    Large brokerages are able take advantage of much smaller players because of one thing; a linear predictable wrokflow; a workflow that’s prevalent throughout the industry. Agents are caught up in the turbulent never-ending battle of new business( leads) vs. current business(listings,buyers) and are forced to wear many hats. This constant repositioning is expensive and cumbersome, but that’s not the worst of it;the worst of it is that their actions are predicatable. Anyone that is predictable can be easily defeated by copying. Is there any wonder lead resellers came along to sap 30% of gross commissions with a simple tagline “We’ll tell you what your home’s worth”? This was made possible because the CMA is absolutely predictable. The same thing is happening now with the listings( sent out to multiple sites). How is it possible to differentiate yourself by having your listings posted to 25 different sites; it’s not.

    The bottom line is that predictability equals economical suicide, so don’t be predictable. Agents will acomplish this by producing ,publishing, and distributing information over the web in 60 seconds or less. I know because I’ve designed it.

  • Adrian Sherwood

    Rob,

    An elephant gun is not needed. A unified communications system can overcome economies of scale AND big money.Here’s how:
    1. Combine communications in four areas (marketing, prospecting, CRM, lead management)
    2. Build a platform that allows a single agent to master/utilize that platform from anywhere on the planet
    3. Make it possible for agents to deliver their services across the globe in 60 seconds

    This platform accomplishes three key goals:
    1. Increases agents value
    2. Lowers operational/implementation costs
    3. High Tech and High Touch become a single entity

    Large brokerages are able take advantage of much smaller players because of one thing; a linear predictable wrokflow; a workflow that’s prevalent throughout the industry. Agents are caught up in the turbulent never-ending battle of new business( leads) vs. current business(listings,buyers) and are forced to wear many hats. This constant repositioning is expensive and cumbersome, but that’s not the worst of it;the worst of it is that their actions are predicatable. Anyone that is predictable can be easily defeated by copying. Is there any wonder lead resellers came along to sap 30% of gross commissions with a simple tagline “We’ll tell you what your home’s worth”? This was made possible because the CMA is absolutely predictable. The same thing is happening now with the listings( sent out to multiple sites). How is it possible to differentiate yourself by having your listings posted to 25 different sites; it’s not.

    The bottom line is that predictability equals economical suicide, so don’t be predictable. Agents will acomplish this by producing ,publishing, and distributing information over the web in 60 seconds or less. I know because I’ve designed it.

  • http://robhahn.wordpress.com/ -Rob

    Hi Adrian — thanks for your comment! :)

    A couple of points.

    1. Combine communications in four areas (marketing, prospecting, CRM, lead management)
    2. Build a platform that allows a single agent to master/utilize that platform from anywhere on the planet
    3. Make it possible for agents to deliver their services across the globe in 60 seconds

    I like these features a great deal. I’m not sure I’m buying the “globe/planet” aspect of it, but anything on the Web is inherently global, so, I’m good there.

    I’d like to understand a bit more your comments re: predictability. I’ll confess to not understanding that point.

    Google is perfectly predictable. So is Ebay. So is BMW. None of those companies have any trouble dominating their industry.

    I think what you’re pointing to isn’t predictability per se, but commodification. That is something I’ve been discussing on this blog for some time now, and I completely agree with you there.

    At the same time, I don’t believe that commodification can or should be fought with something like information access. Goldman Sachs and Morgan Stanley work with almost entirely commoditized data, but have no trouble beating down competitors. I think the same thing applies in real estate. Put simply, it’s this (with apologies to James Carville):

    It’s the service, stupid!

    Note, however, that while agents and brokers can survive and thrive based on superior service, the MOF cannot. For the MOF, it isn’t the service per se, but the platform itself. The features, the benefits, the ease of use, etc. that all takes time and money to develop. And if the platform is solid (e.g., your platform that you’ve designed) and is a winner in the marketplace, your company will grow swiftly at the expense of your competitors. Then you will become the elephant gun.

    So I see no disagreement here. When it comes to service providers, you’re on the money. But when it comes to technology providers, i.e., the MLS of the Future, then the bottom line is that “He who hath, shall get.”

    -rsh

  • http://robhahn.wordpress.com -Rob

    Hi Adrian — thanks for your comment! :)

    A couple of points.

    1. Combine communications in four areas (marketing, prospecting, CRM, lead management)
    2. Build a platform that allows a single agent to master/utilize that platform from anywhere on the planet
    3. Make it possible for agents to deliver their services across the globe in 60 seconds

    I like these features a great deal. I’m not sure I’m buying the “globe/planet” aspect of it, but anything on the Web is inherently global, so, I’m good there.

    I’d like to understand a bit more your comments re: predictability. I’ll confess to not understanding that point.

    Google is perfectly predictable. So is Ebay. So is BMW. None of those companies have any trouble dominating their industry.

    I think what you’re pointing to isn’t predictability per se, but commodification. That is something I’ve been discussing on this blog for some time now, and I completely agree with you there.

    At the same time, I don’t believe that commodification can or should be fought with something like information access. Goldman Sachs and Morgan Stanley work with almost entirely commoditized data, but have no trouble beating down competitors. I think the same thing applies in real estate. Put simply, it’s this (with apologies to James Carville):

    It’s the service, stupid!

    Note, however, that while agents and brokers can survive and thrive based on superior service, the MOF cannot. For the MOF, it isn’t the service per se, but the platform itself. The features, the benefits, the ease of use, etc. that all takes time and money to develop. And if the platform is solid (e.g., your platform that you’ve designed) and is a winner in the marketplace, your company will grow swiftly at the expense of your competitors. Then you will become the elephant gun.

    So I see no disagreement here. When it comes to service providers, you’re on the money. But when it comes to technology providers, i.e., the MLS of the Future, then the bottom line is that “He who hath, shall get.”

    -rsh