If you have not seen the 2007 film, A Hero Ain’t Nothing But a Sandwich, don’t bother. It’s a pretty depressing story about a young boy who gets hooked on heroin. But I love the title. It takes a word like Hero, with its multiple meanings and twists it into something profound. One of most important impressions that I got from the RISMedia CEO Summit last month is that the meaning of Disruptors can be twisted around too.
someone or something that interrupts an event, activity, or process by causing a disturbance or problem. To cause disorder or turmoil.
I have focused the better part of my career on strategic planning. Over that time, none of our clients have ever been disrupted. A key part of managing the success of your business is studying the market, assessing threats, and developing contingency plans, and building strategies to find your unique centers of excellence that scare the crap out of your competitors. What we call disruptors today are merely innovators who should motivate you to develop and execute a winning strategy.
Remember when Redfin wanted to upend the traditional real estate brokerage in 2004? Their goal was to have people buy homes off of the Internet. They combined the best features of online property search with brokerage. They innovated with map-based search when everyone was doing form-based search with list results. In 2006, they were the Inman Innovator of the Year. They pushed forth efforts to get data rights for brokers, including Virtual Office websites and sold data. They prefer to hire agents as employees rather than independent contractors, and insist that consumers rate their service so they can constantly improve. They offer their services to consumers at significant discounts, and partner with traditional brokers for referrals in areas they do not cover.
Redfin is an innovator that motivated real estate brokers to get better. After 14 years and millions of dollars invested, they have grown to service hundreds of markets across the nation. They won their segment and demolished folks like For Sale by Owner and their look-a-like competitors. Can anyone name a traditional brokerage that was forced to close their doors because of Redfin? Of course not. Redfin does Redfin and they do it better than anyone. No broker in the nation can come close to their online dominance. They have cemented their place and their slice of the pie. I am not aware of any market in America where Redfin has the most listings, agents, sales, or market share. But they do just fine and so do the other brokers in the market.
What they disrupted were the brokers who were asleep at the wheel with their website. They pushed the adoption of agent ratings. They made all brokers better. But they did not disrupt them.
The biggest disruptor in real estate over the past decade has been Zillow Group. But they have not disrupted real estate agents or brokers. When they entered the market, a 300-agent firm was spending over a $1 Million a year on newspaper and magazine advertising. At the most, that same brokerage may be spending $100k per year with Zillow Group. The other $900k has gone into helping brokers make powerful contributions to the quality of technology services for agents and consumers. By the way, print generated more leads then and it continues to generate more leads today than digital advertising. But that does not really matter. Zillow changed the way that consumers think about having their home marketed for sale. They got into people’s heads. They communicated their value to the consumer and allowed the consumer to dictate change to the real estate broker and agent. Smart. Expensive.
Who are today’s Disruptors? If you look at the panels at industry conferences, you typically continue to see Redfin with new entries by Opendoor and Compass.
Opendoor wants to take the used car model to consumers. Real Estate brokerage is a consignment house today. Would some people prefer a quick sale with lower proceeds over a consignment sale with higher proceeds? Sure. I trade in my cars for a lot less than I would get if I sold them myself (FSBO) or put the car on a used car lot (consignment). Is it hard to imagine that there are some consumers that feel the same way about their home as they do about their car? Not really.
A friend of mine lost her father recently. He was 81 years old and had a heart attack. He left behind his wife who suffered a stroke a few years ago that left her paralyzed from the waist down. My friend lives in Pennsylvania and her disabled mother lives in Florida. She flew down to Florida, buried her father, put the home on the market, and transported her mother to Pennsylvania. If Opendoor was available in their town, she would have quickly opted to dispose of the house at a loss to remove that issue from her life. Instead, she had to carry the burden of fixing up the home for sale, cleaning, etc. Spent lots of money and time that she did not have away from her career. Who would blame her from using Opendoor?
Opendoor will have their challenges. What they plan to do is hard. Like cutting through the tundra to find a new frontier, they are the early explorers. I doubt that they will strike gold or take advantage of a major consumer shift. But they may take a slice of the pie like Redfin.
Compass is a completely different animal. They are consuming top agents and top brokerages. Somehow, they are a disruptor, but HomeServices of America and Howard Hanna are not? What is the difference? These firms operate on old fashioned brand building and a commitment to agent success. What about NRT? They fight hard too.
On the agent side, you have Keller Williams who is fierce, along with new entries like eXp Realty (who killed the office), and HomeSmart and United Real Estate who pitch 100% commission.
All of these companies are innovating. They are building a story. You need your own story. You need that thing that you deliver which everybody knows is your center of excellence. Find your space. Define it well. Communicate it well. Execute your plan. Sell your excellence over your competitors. Be relentless at what you do best. Do this, and you will always have a solid business with the market share that you command. Don’t be intimidated by someone else’s’ vision. Be motivated to pursue your own. Disrupt yourself.