Guest Post: The Real Estate 2.0 First-Mover Advantage

Wikipedia: First-mover advantage is the advantage gained by the initial occupant of a market segment.

The first-mover advantage tends to be associated with high-tech because the classic first mover enjoys the quick adoption rush of a new product or service, and is protected by a high barrier to entry - i.e., a technologically complex development process and its associated patent protections. More fundamentally, a successful first mover will grab market share quickly... but that implies a fast product adoption rate.

Well, real estate has historically proven to be an industry that is slow to adapt and slow to adopt. Last November, I discussed how hard it is to establish a first-mover advantage with a new Real Estate 2.0 product or service because it can take years for product acceptance, during which time competitors, even the brokers themselves, can build their own copycats. Thus, Real Estate 2.0 companies can leverage and retain their advantage, not from first mover product hegemony, but by continually adapting their product to fit the market.

Here are three ways Real Estate 2.0 companies have done this:

1. Continually evolve the product with fanfare to establish a distinct cutting-edge brand reputation:   

• Zillow keeps re-branding itself - first stage it was a consumer play and enjoyed hit consumer traffic; second stage, it evolved into an agent play with EZAds and Home Q&A; third stage, will it try to attract broker relationships?
• Redfin uses mass media consumer marketing avenues like 60 Minutes. It doesn't matter that its brand reputation with Realtors is tarnished, it is playing to a virgin customer - the American consumer - and it's getting fanfare and a positive marketing spin.

2. Create strategic needs for broker cooperation, so that they don't opt to build their own: 

• Trulia establishes relationships with the biggest national brokers to seed their pipeline to the agents who advertise on Trulia, prompting Brad Inman to predict #1. Trulia will soon announce a big round of funding.    
• Cyberhomes and eppraisal have adopted the business model of freely supplying their AVM engines to brokers.

3. Create a sticky Web 2.0 community oriented site because the competition (like all the brokers) are still clilmbing out of Web 1.0 stage.

• Not too many examples yet. I did imply two weeks ago that the first brokers that build Web 2.0 functional IDX Web sites will immediately enjoy local first mover advantage in terms of website traffic and search engine ranking.    
• Active Rain is an example of a pure first mover with its popular RE 2.0 networking community. It seems hard for real estate professionals to commit to more than one networking community.

At Transparent Real Estate today, I post a followup article about the Second Mover Advantage and how it seems more appropriate for real estate business development... watch what the first movers do, learn from their mistakes and build a better mousetrap.

--Pat Kitano, Transparent Real Estate

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