In my junior year in high school, I got an expensive zip-down velour sweater for Christmas. My mom drove all of the way to St. Louis, Missouri, to find the high-end brand that made them. I proudly wore it to the first day of school after our holiday break, only to see nearly every boy in my class wearing one. Thud, I never wanted to put it on again.
The irritating thing was my school mates were wearing cheap knock offs, not the genuine article like mine.
It reminds me of real estate tech platforms these days.
Sorting out the wannabes from the real deal can be tricky.
When Keller Williams tech guru Josh Team was asked at Inman Connect how many engineers he employs to build its tech platform, he said that 75 people “touch code”. The question was a way to sort out truth from trumped up promises.
Gary Keller, on stage the next day, was fuzzy about details of his budding real estate platform when he sketched out his ideas on a flipchart. He used the discussion mostly to identify good and evil platforms with the promise of a powerful KW reveal later this year.
Credit Keller for bringing the issue into the real estate news trending sphere, before we all got distracted by sales of homes with too much cat urine.
In Re/Max’s second quarter earnings call last week, CEO Adam Contos announced that his company is developing “an online platform that will deliver substantial value to consumers and allow Re/Max agents to connect with homebuyers and sellers in a more meaningful way.”
The new Re/Max agent tech platform will be built by booj — which stands for “be original or be jealous” — a Denver-based startup that Re/Max acquired earlier this year.
Keen on boasting of its cool culture, the Denver tech company builds “dynamic” real estate websites.
At Inman Connect last month, Compass announced a technology platform that it would license outside its own agent network, starting with Boston-based Leading Edge Real Estate. The deal fell apart in a week, but Compass agents swear by what they have seen so far.
Ten years ago when I started an ebook business, the term “platform” was a necessary slide to any startup fundraising deck. Everybody either touted they had a platform or were building one, and most were not and never did. The exception, of course, was the beast of the platform world Amazon.
“Who has the best platform in real estate?”
I posted that question on our Inmanville Facebook group last week.
The post stirred up a rousing debate about the best and worst platforms. All of the likely suspects, and many more, were mentioned including Windermere’s Moxi, Realogy’s Zip, Brevity, eXp Realty, Redfin and Commissions, Inc.
Tom Rossiter posted, “the original platform may have been the MLS…”
So true, and today the MLS is threatened, because the industry has been a lousy custodian of this high-valued platform. Twenty years of greedy power grabbing over the multiple listing service has gotten in the way of creating a national MLS. The platforms of all platforms would have positioned the industry for decades to come — a sad sequence of events that the real estate big shots should some day be held accountable for.
With this conspiracy of incompetence as the backdrop, entrepreneurs moved in, building their own formidable platforms.
The two leaders are Zillow and Redfin
One way to measure platforms is by their reach and how well they are monetized. Zillow numbers are in the stratosphere and no one is close — $1.1 billion in revenue last year; 187 million unique users; 6.3 billion visits last year and 110 million homes in its real estate database.
With a more complete solution than Zillow, for both the agent and the consumer, Redfin’s numbers are not as impressive, but they are way out ahead of other large real estate companies.
These two companies have the chops, the resources and the strategic thinking to become the all encompassing platforms for real estate. They could achieve the scale to influence the housing market, much like Uber did in transportation, Amazon in e-commerce, Google with advertising, Apple with mobile applications and Facebook in media.
No competitive advantage
In a new report published last week, “The Policy Challenge of Artificial Intelligence”, the Boston University author discusses the economies of scale that can be achieved with powerful tech platforms. Keller’s point.
An example the report points to how Walmart used its technology platform to master logistics, giving it the scale to leapfrog its competitors. Important here is proprietary technology, not bolted-on tech applications that competitors have.
Many restaurants deploy off-the-shelf reservations systems like Opentable. It provides improved service but, because it is available to competitors, it offers no competitive advantage that allows a restaurant to gain market share, according to the Boston University report.
This is the history of real estate tech over the last 20 years. Everyone is doing more or less the same thing with the same applications, some with cute website branding as their only tech differentiator.
A dark horse?
But I got my eye on a third potential and fledgling platform coming out of nowhere by two likeable entrepreneurs who have been building real estate software for 25 years. Greg Robertson and Dan Woolley dub their company W+R Studios. Its signature product is Cloud CMA, which does comparative market analysis for agents to deliver to home sellers.
It’s software does 260,000 CMAs a month.
Here is the hook that could propel their company. The southern California firm added a new instant offer feature to their product last month, so when presenting the CMA the agent can also point the home seller to an instant offer alternative from investors and iBuyers.
It is being tested in Los Angeles with signs that it might be a breakaway product — maybe even a platform.
You can imagine most agents in the country using the software someday with all of the big Wall Street iBuyers and local investors participating on the Cloud CMA platform. It sports an easy to deploy API for investors and a friendlier-than-Mr. Rogers user experience.
Plus, the Cloud CMA agent controls the outcome even with an iBuyer, because it is a closed ecosystem for three parties: seller, agent and investor.
This would put it on the right side of the angels on Keller’s binary “we-versus-them” flipchart diagram.
Consider real estate is a home listing business, and none of the platforms offer a meaningful listing solution. Cloud CMA does.
With its unique agent features and consumer benefits, it is arguably a true platform with buyers and sellers on each side — not a lead generation, digital marketing or CRM program.
With big cats like Redfin and Zillow already building the essential elements of a powerful gold-plated platform, it is hard to imagine a small, agile entrepreneur popping onto the scene.
But maybe it will take off like the new viral Shiggy dance that propelled Drake’s new “In My Feelings” music video. I would dance the Shiggy to that.