Three Black Swans: From the T3 Summit

Above is the presentation I gave at Stefan Swanepoel’s T3 Summit in Las Vegas this past week. I had a great time researching and preparing it, and there is a thread over on Facebook (courtesy of Michael McClure, who used my presentation to showcase how to generate online buzz) discussing the three black swans.

But I thought I would add a few additional words.

What’s the Point of Talking About Things Unlikely to Ever Happen?

As I noted, a “black swan event” is something that is very, very unlikely to happen. In fact, what I presented weren’t true black swan events at all, since they are foreseeable and plausible. True black swan events are completely unpredictable and unforeseeable, like the Tohoku earthquake and tsunami in 2011.

The real issue isn’t foreseeability, however, but normalcy bias. As Wikipedia puts it:

People with a normalcy bias have difficulties reacting to something they have not experienced before. People also tend to interpret warnings in the most optimistic way possible, seizing on any ambiguities to infer a less serious situation.

That pretty much sums up most of the real estate industry.

The point of discussing “black swan events” then is to challenge the normalcy bias of industry leaders, and at least get them to look at default assumptions and day-to-day operating procedures.

For example, I live in a hurricane zone. Yet, I know neighbors who have no water stored at all. I had three days’ supply of water, but after Sandy knocked out New York for far more than three days, I added a portable water filtration system. Doesn’t mean I expect those things to happen, but that I reviewed my actual preparation for hurricanes and modified things.

The Normalcy Bias I Would Review

So the point of the three black swans is not that those things would come to pass, but to challenge some of the normalcy bias assumptions of the industry.

Black Swan #1: MLS Becomes a Public Utility was trying to ask what brokers and agents would do if access to information were completely removed as a service element. If listing data were no longer any sort of intellectual property, what then?

Black Swan #2: Realogy Acquires Zillow was trying to ask how the industry might respond if the largest brokerage also owned the largest web-mobile portal. Quite a few brokers at T3 Summit kept repeating the oft-heard line that what brokerages offer to agents is culture and training. My question is whether that would remain that valuable if one brokerage could offer 50 million unique visitors per month to its agents while another one could not.

Black Swan #3: Walmart Realty Expands was asking whether and how real estate would or could compete with a true, well-financed cost-competitor. The normalcy bias today is that competition in real estate is all about relationships and service and local expertise and so on… but never on price. I thought it useful to imagine a Walmart + Redfin with salaried agents making $9/hr plus a bonus, trying to capture some of that $50 billion-plus real estate commissions market.

In all these scenarios, and others, the point is not to prepare against those events happening. The point is to review one’s current strategy and operations to see if they are optimized and able to withstand various unpredictable events.

In any case, I do hope people had and will have as much fun discussing those quite-unlikely-yet-quite-plausible scenarios as I have had coming up with them. 🙂


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Rob Hahn

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

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