Up at 3:30 a.m.

Editor’s note: In this three-part series, we talk to some new entrepreneurs on the real estate block, and find out what they’re doing, what they’re doing differently and how the industry has reacted to them. They’ll talk about what it takes to launch a real estate company and barriers to innovation the industry puts up along the way. (See Part 1: Breaking the business model mold and Part 3: Roadblocks to innovation.)

Dain Ehring’s Thursday last week was typical of an entrepreneur.

Up at 3:30 a.m., the 42-year-old attended a meeting in Los Angeles with First American. On his way to the airport, he fielded calls on his cell phone and then boarded a New York-bound flight. He walked off the plane ready for a dinner meeting with his company’s No. 1 customer, JP Morgan Chase.

Friday was packed with meetings with other Chase executives, before Ehring headed back to Northern California where his business, Dorado, is based.

“Fun, but busy,” is how Ehring describes the entrepreneurial life. “It’s a 14-hour day still.”

And that’s six years after the 150-employee company began. Dorado provides Web-based systems for the mortgage industry. In Dorado’s start-up phase, Ehring’s days routinely began at 4 a.m. Now, he’s usually in the office by 8 a.m., although it’s not uncommon for him to start work from home at 6 or 7 a.m.

Ehring isn’t alone. Entrepreneurs abound who are challenging real estate’s status quo, working hard to bring sense and efficiency to an arcane industry. In fact, the fragmented and often slow-to-change nature of the real estate industry leaves the door wide open to such freethinkers. But those same qualities can present extra roadblocks for gaining acceptance for a new way of looking at things.

Hear what realty entrepreneurs have to say during the Inman News Audio Conference “Alternative Real Estate Business Models” on Thurs., Sept. 23. Click here for more information.

“There’s a ‘If it’s not broke, don’t fix it,’ kind of attitude,” said Michael Sokolow, co-founder of PropertyRover. “A lot of people have been very successful using the status quo.”

Those who have successfully challenged the status quo say it takes a blend of tenaciousness, perhaps even foolishness, and a belief that their ideas would help real estate. It also doesn’t hurt to try and persuade those in the field that the new product or service won’t put them out of business, but instead is simply a natural next step.

“It’s evolution, not revolution,” Sokolow said.

In fact, many entrepreneurs echoed that sentiment. They were quick to point out they weren’t outright challenging the traditional models found in the industry, but instead work within its parameters to help push it forward.

Sokolow said realty agents seemed content with the nature of New York City’s real estate world, which doesn’t have a Multiple Listing Service. Consumers, however, wanted more information.

In place of an MLS, PropertyRover acts as a search engine for New York brokerage Web sites. Agents input their criteria into the software, which then returns property listings meeting those specifications. To find out more about a property, the software links to the actual brokerage’s Web site. The New York City-based company has six employees, and revenues of less than $1 million, Sokolow said.

When it began, some agents warmed up to the service right away since it made it easier for them to access listings. Others didn’t like the service, believing it to be “somewhat of a threat,” because they company was doing something that deviated from the real estate norm, Sokolow said. But that attitude has shifted, he said, as the company has expanded and gained more customers.

The company’s efforts to show it wasn’t trying to put agents or brokerages out of business helped to dispel that perception. For example, the service is not available to consumers, only to brokerages.

“We wanted to work with the brokerage community,” Sokolow said. “We didn’t want to upset the existing balance.”

Still, it took time to persuade some that the service wasn’t a threat. Sokolow remembers the early days of encouraging brokers and agents to test out the software and making pitches to different brokerages.

“It’s very nerve-wracking whenever you create a product that you think is a good idea and you don’t know if the end user is going to find it as good as you do,” Sokolow said.

That’s true in real estate where many agents worry they’ll be put out of business by new technology. Sokolow said that the Web is “just going to change the way you do business, and it has.”

Brad Blumberg, CEO of Philadelphia-based Smarter Agent, believes it’s not just the Internet that is going to change the real estate field. Instead, wireless technology is the next frontier.

“When you’re outside of real estate, you recognize that it’s one of the last industries to adopt technology,” Blumberg said.

Smarter Agent, which employs 12 people, developed and patented a location-aware information service that transmits home data to consumers via cell phones or personal digital assistants (PDAs) equipped with the satellite-based Global Positioning System. The idea is that buyers will spot for-sale homes while driving around various neighborhoods, then connect to the Smarter Agent service using a Web-enabled cell phone or PDA device while sitting in their cars in front of the property. The service automatically detects the caller’s location via the GPS satellite, and then relays the property information back to the caller in real time.

Despite that consumer focus, Blumberg points out that Smarter Agent “takes time to play by the rules.” That means talking with local MLSs to let them know what the company is doing, being aware of all the rules and regulations and trying to make change from within the industry.

Does the real estate industry make it difficult for entrepreneurs to succeed? Take a survey.

“It’s a lot less expensive to do it that way,” Blumberg said. Many start-ups that challenge an industry will fight all the way to bankruptcy. But that doesn’t make sense to Blumberg.

Because Smarter Agent is still a fairly small company, it hasn’t yet attracted a lot of attention and hatred from big brokerages, he said. But that could change, Blumberg said, and Smarter Agent could be the target of the real estate industry’s dislike just as other companies challenging the status quo have become.

“I think in the next year or the next two years, we either cut deals with the big guys or we’re going to attract the same kind of venom,” Blumberg said.

Now that the company is past its initial start-up phase, Blumberg spends much of his time looking for funding, answering questions about the company and revising its business plan.

“It’s definitely long hours,” Blumberg said. “It’s a 6 a.m. to 8 p.m. kind of deal. It’s seven days a week.”

Dorado’s Ehring and others at the company had to spend time learning the mortgage industry, since they had come from a high-tech background, not financial services or real estate.

Overcoming the knowledge gap was an initial challenge, but reaction to Dorado’s services was pretty favorable even though it went against how things had been done. He said the new technology overwhelmed some people, but Dorado simply kept working at gently changing the field to earn the industry’s trust and buy-in.

Like others, Ehring found long hours, determination and an approach that focuses on evolution, not revolution, has worked best in challenging the real estate field.

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