I think we all understand the importance of innovation as the lifeblood of the economy as a whole. It’s pretty simple equation — if businesses don’t innovate and improve, they get beat by others who do. But innovation doesn’t just “happen”. Far from it actually. It requires significant brain power & talent, financial capital, desire & passion, and CONNECTIONS.
I 100% agree with Joel that the real estate vertical should be supporting innovative new businesses a heck of a lot more than the industry is today. I think it’s beyond safe to say the industry would benefit from an incubator program (like PIE in Portland, yCombinator, Tech All Stars, etc) to unite the industry with the entrepreneurial community.
Real estate brokers should be leading the charge because, from my perspective, they have the most to lose if others out-innovate them.
But they aren’t.
As I mentioned in my comment on 1000Watt, I’ve been thinking a bit about this topic recently as well. I speak with a number of entrepreneurs looking to enter the real estate industry. They have great ideas, passion, sometimes even capital — but they often don’t understand the industry (MLS, IDX, agent-broker-franchise dynamics, duel commission, etc) and certainly have no idea who they need to speak with to get their product/service in front of the right people (and definitely don’t know HOW to reach those people once identified). On the flip side of that equation, I also speak with agents and brokers desperately starved for quality information regarding technology products to help them better serve their clients (and reach new ones).
Hungry entrepreneurs are out there trying to find key people to speak with in the industry, but getting into the “brokerage” world (which is the most efficient way to reach agents) takes a lot of time, money, and connections — none of which most entrepreneurs have. It’s not an easy process – I saw Zillow from inside as the company navigated those waters (they are still navigating those waters) and the amount of resources and money it took to gain a significant foothold in the brokerage community was far beyond what most entrepreneurs could possibly throw at the challenge.
This industry has been sold crap for so long that everyone is weary of new companies “pitching” them. From my experience, personal relationships, which requires actually meeting and spending time together in real life (not just over the phone), are the only way to break through. There has to be a better way — and an incubator program of some sort seems like the perfect solution.
Why doesn’t it exist yet?
The “Friend” Syndrome
Too many take the easy way and only work with those they already have relationships with. I understand the desire to do business with people you know (I operate the same way) — but seriously, to WIN, you can’t work with your friends JUST to work friends. Part of the lack of innovation in the real estate vertical is due to this exact issue. Brokers need to make themselves available and known if they are actively looking for technology solutions — otherwise they just end up with the same “crap” that their “friends” have been selling them for 20 years. Technology has changed drastically over the past 15 years, even just the past 5 years. You can’t just rely on your friends and “hope” they are on the bleeding edge; chances are good they aren’t. I can assure you there are brokerages out there who are investing in the cutting edge technology and testing that technology every step of the way to ensure success. Sure, they too prefer to work with people they already know — but, if those they know aren’t creating the best solutions out there, they are finding someone who does or doing the work internally.
We all know that very few people enter serious business relationships with people they don’t know at all. The challenge with a truly successful incubator program is getting enough of the RIGHT (and that’s crucial) people together in person for long enough to build real trust and relationships between participants, partners, and investors. And “in person” requires one of two approaches:
- Everyone traveling to one central location
- Taking this concept to each local market
Neither approach is without its’ own set of challenges. Business travel is hard to coordinate schedules and really expensive for participants (most of whom are scrappy entrepreneurs trying to save every last dime). The challenge with taking the model to each local market is that there likely isn’t enough investment money in a given market to make it worth it to the entrepreneurs. Best case, there are only a few brokers in a given MSA doing well enough to think about investing in such an initiative. Worst case, there are none. Further, there aren’t enough local technology partners that TRULY know real estate to make it work. You’ve got to really understand the real estate industry to build a product that can gain a significant foothold.
Entrepreneurs: Who are you trying to reach as an end user for your product or service? What is the hardest part of innovating in and entering the real estate industry? Where are you currently finding consultants, brokers, and influencers to speak with? What is your overall marketing strategy? And, most importantly, how are you ensuring you are creating products and services WORTH selling..ie great solutions that actually WORK?
Brokerages (Coldwell Banker, Prudential, Keller Williams, etc): What type of technology solutions are you actively looking for? Where do you search for them? Do you post those needs publicly anywhere? What is the process you undertake to evaluate vendors? What is the best way for entrepreneurs to reach out to you? And how could the entire process be improved from your perspective?
Established Real Estate Tech (Zillow, Trulia, Top Producer, MRIS, WAV Group, etc): What are you proactively doing to find new technologies and companies to work with? Where do you look? What sort of technologies would it make more sense to buy than develop internally?
Capital is certainly needed to fund innovation. But Joel is right — cash alone can’t cut it and we need better ways to facilitate connections in this industry. I’m certainly keen to help facilitate something if there is some way I can help.