Getting On the Cluetrain, No. 2: Value of Expertise

In part one of this series, exploring the implications of the Cluetrain Manifesto on the real estate industry, I focused on the basic concept behind the Cluetrain: that markets are conversations, and in the Internet age, authenticity and honesty is absolutely indispensable.

In this part, I’d like to muse on what the value of expertise is in a fully networked conversation/market. In particular, the question of ‘wisdom of crowds‘ must be addressed, as “Web 2.0” tends towards a tendency of valuing the many over the one.

My hope is to spur some thought on what the real estate industry might look like after the transformative power of the empowered community is fully unleashed.

I know that anecdote is not the plural of evidence, but stories are fun! So I begin with a story.

Community or Mob?

One of the things I do — to my wife’s eternal chagrin and amusement — is play MMORPG’s. That horrid acronym stands for Massively Multiplayer Online Role Playing Game, and is sometimes shortened to just MMOG or MMO. World of Warcraft is the best known example. I’ve been playing this genre of games since sometime in 1999, when I encountered it, and believed that I was looking at the future of entertainment, as well as a fascinating social experiment.

In most MMO’s, you have guilds or clans — a group of players who band together for companionship, helping each other do things, and so forth. In fact, clans are the main social unit in most MMO’s. I’ve been clan leader of some very large clans and the experience was absolutely fascinating as it leads to so many unexpected insights about human behavior in the real world.

While I could go on and on about MMO’s, in this case, there is a reason for the story. While you have clans, you can’t always be online at the same time. So people will often find random groups of other players and team up to tackle some challenge — a quest that cannot be done solo, or an exploration of dangerous unknown areas. I have found over years of experience that if you take five or six otherwise very competent players and throw them into a random group, that group is far more likely to fail than a group of five or six otherwise not-so-competent players from the same clan.

Lack of comfort with each other’s style is one reason — but almost equally important, the group of strangers have not established leadership pecking order, and fail because there is no clear leader. A random group of very experienced players will bumble along for a bit, then almost as if by magic, establish a leadership hierarchy on the fly, as the person with the most expertise, best equipment, or in-depth knowledge naturally takes over.

As far as I can tell, this phenomenon is as natural to humans as is breathing. It might explain how tens of thousands of years ago, human community arose out of wandering nomad bands.

What differentiates a Community from a Mob? The answer, I think, is Leaders. Even the least organized group of humans — the random group of online gamers, who didn’t know each other 30 seconds before joining the group, and won’t see each other after the group disbands — develop leadership hierarchy, or fail.

The One-Eyed Man

“In the kingdom of the blind, the one-eyed man is king.”
— Desiderius Erasmus

What makes someone a leader?

The answer could and have filled tomes upon tomes of writing from the scholarly to the idiotic. But for the most part, they focus on the real world, where consequences of birth, luck, money, power and such things influence who becomes a leader.

In the online world, those things disappear. You could be the heir to the Microsoft fortune, but online, no one knows (unless you tell them, and they they have to believe you), and no one cares. You could be the most beautiful woman in the world, but online, you’re just a set of words on a screen (or an avatar in a computer game). Online, you are judged more or less on what you know, and how you deal with others.

Expertise is, therefore, a critical component of leadership in online communities. And leadership is what sets a community apart from a mob.

Even the shining paragon of community generated content, Wikipedia, turns out to have leaders:

The third – and perhaps most critical – has been the evolution of an incredibly intricate and democratic social order to keep this vast sprawling project in order.

There are hundreds of thousands of “Wikipedians” who have contributed or edited articles. But the core community, according to Wales, is about 200 people who, by now, know each other quite well. Outside this inner-inner circle is a core of about 2,000 people who make more than 100 edits each in the last month. Beyond this, you have around 10,000 people who will have made more than five edits. There are administrators, bureaucrats, stewards and developers all with different levels of technical and administrative authority.

That core community of 200 is what makes Wikipedia a community, and a valuable resource, instead of a mob.

Cluetrain Wants Conductors

The premise of Cluetrain is not to do away with experts, with leaders, and with specialists. In fact, I would argue that it is exactly the opposite. Cluetrain ideas want to liberate the experts, leaders, and specialists to speak with an authentic voice to other human beings often called “customers” or “clients” or “leads”. Cluetrain’s basic insight is that corporate behavior and corporate ideology stands in the way of this engagement by experts and leaders with those who seek their expertise and leadership.

Applied to real estate, the whole question boils down to this:

If markets are conversations, what privileges the words of an agent over those of a non-agent?

The fear that the industry as a whole has in the pit of its stomach is the idea that once various community websites take over, the agent will be like a vaguely smelly fat kid at a party. “Disintermediation” is the term this fear usually goes under, and it’s probably way overstated. But it’s there.

For thousands upon thousands of “realtors” who know jackshit about real estate, and thinks it’s “all about the relationship”, the answer to the question is not a happy one. There’s nothing special about simply being an agent that privileges anything one says. It’s what you know that matters, not who you are. The answer, from a cluetrain perspective, is that only expertise privileges the words of an agent over those of a non-agent.

Combine expertise with authenticity, and you have an extremely powerful voice with which to speak to the market, the market that is a conversation.

Mob Rule Is Seldom Law, And Rarely Justice

A particular phenomenon with online “communities” is that because of the anonymity of the Internet, mob rule becomes particularly commonplace, and particularly bad. All of the standard barriers to acting like an idiot that exist in real life — like people knowing where you live — don’t apply on the web.

If Cluetrain theory is interpreted as “do what comes naturally” then it has the tendency to turn into mob rule. What Cluetrain needs to save it from anarchy is expertise and leadership.

I look at the recent insanity with the housing bubble as an example of mob rule. Individuals without any particular expertise started telling other individuals — in emails, message boards, at parties, at church, etc. — about how you just can’t lose any money in real estate! That the need for housing is huge, and supply is limited. That financing is a walk in the park. That You Too Can Become a Real Estate Millionaire with No Money Down Using My Patented Wealth System!

I’m certain that the more experienced, more expert people were advising their clients, their friends, and their family not to go nuts. Those who had seen the highs and the lows of prior market swings knew things that the newbies who just ran into real estate did not.

But because the grand conversation had not truly begun when the bubble was building up, real estate became mob rule without guidance and leadership based on expertise. We are paying the price today.

Experts can be wrong too; they can be craven or misguided or venal. Look at the collapse of Bear Stearns. One can’t argue that collapse happened because of a lack of expertise. It happened in spite of expertise.

However, the financial world is more of a community than a mob, simply because of institutions like the Federal Reserve, staffed by folks who have a certain amount of expertise in matters financial. Even though Bear Stearns collapsed, the financial markets have not (as yet). Things will turn around, come together, and the mob easily given the panic and exuberance will be brought under control.

That is the value of expertise in a cluetrain universe. The frightened herd hears the voice of the expert — if delivered with authenticity and humanity — and calms down. Or if too calm, it starts to move because of the expert voice. Immense back-and-forth goes on, with the expert providing education on top of guidance during that conversation. But through the process, the herd becomes a community.

What Does It All Mean?

At least with real estate, one conclusion I draw from this analysis is that real estate professionals owe a duty of expertise to the community. Most people are not thinking about real estate, about mortgages, about regulations, on a daily basis. Professionals are.

It is not enough just to join the conversation, although that does have some value in and of itself. What is necessary is to join the conversation as a leader, as an expert. That of course means one has to become an expert, through study, learning, analysis, and thought.

Authenticity and honesty are still absolutely required — but in the case of real estate professionals, they need to add true subject matter expertise to the list of requirements. And as experts who are honest and authentic, they have to take down the charlatans and the fools as well. The value of expertise is not just providing useful insight — it is providing leadership to a mob in order to create a community. One doesn’t need a Ph.D. in economics or mortgage finance — just enough expertise to provide guidance to the mob. As Erasmus pointed out, in the kingdom of the blind, the one-eyed man is king. Professionals need not be infallible; they merely need to be expert, be authentic, and be honest.

Many companies have become enamored in recent days with “community generated content”. It is important, then, to understand that “community” requires leaders with expertise. Just throwing up some comments and inviting the mob to speculate and opine away is not enough. Trulia Voices actually does a good job of providing expert leadership, fostering the growth of a community, not a mere mob. It is important to realize that there is a difference between treating the customer as king from a service standpoint, and treating the customer as king from a community standpoint. In service, customers are all-important; in community, customers are the herd.

In the kingdom of the blind, the one-eyed man is king. But honesty and authenticity, the cluetrain principles, separate the good kings from tyrants.

-rsh