I was recently at a real estate conference for a major brand watching a panel discussion. I’m leaving names out because it’s not important to the question/point I’m making and don’t want the distraction.
The panel was a younger moderator (in his 40s) and two industry executives who have 40+ years of experience each. These are gentlemen who have seen it all. They saw the rise of Remax, saw the rise of Keller Williams, saw down markets, up markets, saw Microsoft’s foray into real estate, saw all kinds of banks and insurance companies (Merrill Lynch, Prudential, etc.) come in and out of real estate, saw double-digit interest rates, lived through the Bubble and its collapse, the dotcom revolution… and between the two of them, they have seen, experienced, and lived through just about everything real estate.
Something I noticed as the panel was discussing a variety of topics in real estate was how easily these experienced veterans were able to dismiss potential threats.
The flow of capital into real estate? They’ve seen it before from Sears, Merrill Lynch, Prudential — and all of those companies just lost their ass and got out because they didn’t understand some of the fundamentals of real estate.
Technology as disruption? They’ve seen that before over and over again, from Microsoft to Zillow, and have seen over the years that technology that aids agents succeeds, while technology that tries to displace the agent falls flat.
The massive antitrust lawsuit against NAR? They’ve seen dozens of lawsuits come and go, antitrust suits filed by dozens of lawyers who are after a payday, and have seen them dismissed, fail, and adjudicated in the industry’s favor time and again.
The long and short of it was that we have very little to worry about, because real estate has always been, is today, and will forever be about emotions and relationships. The real estate transaction is highly emotional, and buyers and sellers want a personal relationship with an agent they like and trust. Nothing will ever replace that human connection. The phrase “belly to belly” did come up, yes.
The key to success, then, in real estate is to recruit and retain the best agents who have the best relationships with as many consumers as possible.
It’s a very compelling story. There is real wisdom in experience that simply cannot be ignored. Experience after all is the best teacher, if the most expensive as well. With but a fraction of the experience that these two gentlemen have had, it’s impossible for me to gainsay them. I will have to defer to their knowledge and hard-won wisdom.
At the same time… I can’t help but wonder if that experience, that expertise, comes with a curse. That curse is that people with deep experience and expertise might be more vulnerable to real disruption that goes completely outside of what they have experienced over the years, or real disruption that looks a lot like things they have seen before… but is not.
The Value of Shoshin
In thinking about the idea that experience and expertise are wonderful and critical, except that there is the danger of underestimating disruption, I did some simple research. Apparently, companies have thought about this as well. One such company is Deloitte, the global consulting company. I found an article on Deloitte Insights called “Can CEO’s Be Un-Disruptable?” They interviewed the CEOs of “24 massive, complex, global organizations in industries spanning banking, pharma, technology, natural resources, food processing, health-care delivery, retail, and manufacturing.”
One of the things Deloitte found was the value of cultivating a “beginner’s mindset” — the word “shoshin” is a Zen Buddhist concept meaning “a beginner’s mind.” Deloitte writes:
In the words of Shunryu Suzuki, “In the beginner’s mind there are many possibilities, but in the expert’s there are few.” This captures one challenge CEOs consistently raised: seeing the world from the perspective of someone who does not know much about it. It’s not what’s traditionally expected of them—nor what CEOs may expect of themselves. But rather than trying to be the “smartest” person in the room, our respondents repeatedly stressed the importance of having the “eyes” of someone who does not know everything. They found greater comfort and far better outcomes in asking questions and being genuinely inquisitive (even about things they do know).
One tech company CEO is quoted in the article:
“Among some other CEOs I know, I’m struck by a few who are actually suppressed by their know-how. And they don’t know how to understand the things they don’t know. They automatically look at it and say “we’ll do it this way or that because that’s how we do it.”
That struck a nerve with me, because I do run across a lot of very smart, very wise, very experienced leaders in real estate who are suppressed by their know-how, by their experience, by what they have seen and experienced and know. These are incredible leaders, but they have spent 30 years in the industry, and in their expert’s mind, there are but a few possibilities, to quote Shunryu Suzuki.
Example: the iBuyer Issue
The best example I can think of is how everyone with deep experience in real estate dismisses iBuyer as a “we’ve seen this before time and again.” I’ve written enough over the past year on that topic so I won’t even bother getting into it. All I can say is that’s the case of there being few possibilities in the expert’s mind.
The iBuyers themselves keep telling us what they’re doing, and it isn’t flipping houses. But real estate agents, brokers, company CEOs, and leaders who have deep experience, deep knowledge, deep wisdom, and have seen it all before keep thinking of them as house flippers. I think it’s because iBuyer looks a whole lot like home flippers and it’s very difficult for experts to see them differently.
Those experts may very well be right; that’s the thing about experience. The value is difficult to estimate, difficult to quantify, but it’s there. At the same time, it may be that they’re more likely to get blindsided because their deep expertise and experience prevents them from seeing what beginners and novices see.
One thing that the Deloitte article mentions, and I think it’s smart practice for real estate leaders to do, is to actively cultivate that beginner’s mind, that ignorance. Trying to forget what you know, what you’ve seen, so that you can look at things with a fresh perspective. Here’s Deloitte, quoting Marc Benioff, the CEO of Salesforce:
As we considered this concept, we were reminded of efforts taken by Salesforce CEO Marc Benioff to remind his employees to stay nimble and not expect the current state of affairs to remain. “I respect the spirit of innovation,” Benioff says. “Sometimes that spirit is going through me and sometimes it’s going to come through someone else … I try to cultivate a beginner’s mind; I try to let go of all the other things that have ever happened so far in our industry (which is a lot of stuff) and go, ‘Okay, what’s going to happen right now?’ and then I listen. Deeply listen. To myself, or really to others, or maybe great companies that I see, to the great innovators in the companies we bought, the organic innovators who have been in our company.” [Emphasis added]
Deloitte talks about how Benioff takes time off to consider “profoundly new ideas” and tries to imagine “disruptive ideas from whole cloth” in order to be more ready for disruption, then writes, “Central to the notion of beginner’s mind-set are the willingness and ability to replace the confidence that comes with experience with the curiosity that comes from naiveté.”
I think the real estate industry really could use a healthy dose of Benioff’s methods.
Chances Are, Experience Wins… But…
The way I’m seeing it now, I think it’s always safer to bet on experience and learned wisdom. The enthusiasm of youth and innovators is often overhyped, while the wisdom of grizzled veterans who learned what they learned through hard experience are often not appreciated enough. So bet on experience on the whole.
But… the curse of experience is that blind spot that could develop simply because the expert, the veteran, the experienced leader has seen similar things time and time again, so they miss the crucial difference that could make all the difference in the world.
For example, while I side with the voice of experience that real estate has seen Wall Street and VC’s pour hundreds of millions into disrupting real estate before, the one critical difference today is that investors are pouring money into companies and products and services that are attempting to change the transaction itself. They’re not trying to disintermediate agents, or improve search, or whatever — they’re trying to change the actual way we buy and sell homes. That’s a key difference, and it is one that might make all the difference.
Similarly, lawsuits have come and gone for decades. But maybe the fact that the lawyers this time around are well-funded, experienced corporate class-action litigators who are after not just a payday but a ginormous multi-billion dollar payday could make a difference. Maybe it won’t, and I’d bet on the voice of experience. But it’s worth at least cultivating ignorance, at least trying to forget what one has seen and experienced over the years, to make certain that you’re not overlooking something important.
One solid suggestion I might make: the next time your company or your MLS or your Association is having a strategy planning session, think about inviting a couple of rank novices who don’t know diddly squat about real estate, how it works, why things are the way they are, etc. Lay out all of the disruption or potential disruption you’re concerned about. Then listen to them. Deeply listen.
12 thoughts on “The Curse of Experience, the Real Estate Edition”
Hey, Rob good article! The ” but we don’t do it that way” mentality had been rampant in the industry, in my opinion. I think it’s a mistake to rely too much on either position. Mix the beginner’s mind with experience. A difficult line to walk for sure
“It’s a little bit like, is the Albanian army going to take over the world?”
said Jeffrey L. Bewkes, the chief executive of Time Warner, in response to a scrappy company by the name of Netflix taking market share and having any impact on the entertainment industry in 2010.
We all know how that turnned out..
I am not lawyer, so I will not pretend to know all of the nuisances regarding the anti trust suit brought against NAR, NRT and whatever other large brokerages are or may be named. I think the one thing the plaintiffs will have a hard time arguing is the “fixed” commission. There a number of “discount” or Flat fee brokerages that cater to the consumer. In addition, the commission is always negotiable. I have seen listings offering the buyers agent $500, 1.5%, 2% and so on. If the lawsuit is more about the seller paying the buyers agent’s commission they may have more of argument. If that is the route they are or will go, I would caution what you ask for. How many think that dual agency is the way to go and that is a very real consequence of this lawsuit. How many buyers have an additional 2-3% to pay the buyers agent? How many lenders will be willing to allow the buyer to “build” that cost into their loan? And finally, if the seller no longer has to pay the buyers agent commission, what does that do to brokerages like Redfin?
Trelora tried to offer buyers agents $2,500 and agents threw bricks,through their windows….
You just said it: “How many buyers have an additional 2-3% to pay the buyers agent?”
Agents have an unconcious commitment to this fee as though its doctrine. This is perpetrated by pressure and scare tactics, which are not free market characteristics. Telling homeowners their home wont be shown if they dont give buyers agents 2,3,4 or any % is EXTROTION. This lawsuit is extremely important. If buyers agents have value, the buyer should decide in a free market and pay out of their own pocket. Not 2-3%, pushing paperwork and opening doors is not worth thousands of dollars, this isnt oral thoracic surgery.
Good article. I don’t worry much about things like iBuyer or people buying homes through Amazon, even if they have free shipping. Technology has helped real estate in many ways, but I don’t see it replacing agents. Buying and selling real estate is not like ordering merchandise online. It is very personal and much more complicated.
I once had a buyer make an offer on a property that he had only seen online. He went through his Inspection Period and showed up 2 days before closing to actually look at the house. His wife hated it. He refused to close and lost his $50K deposit, which I suppose was cheaper than a divorce.
Great job Rob.
I have learned one thing in my varied career in this business. To see where things are going you need to know where they have been and why they need to change. That is why I share the following with my clients:
“Experience is really tough to get if you don’t have it.”
I agree that commonly, experience prevents some from seeing where things are progressing, but I also think that this strategic blindness has a a lot to do with the time remaining in the tenure of the person. Why upset the apple cart when the cart will make it just fine to “deliver the apples to the market and get paid” before the the end of one’s career?
The gamble is always the estimate of the speed of change. And that is getting more and more difficult to estimate and in today’s business environment. The timing we had once guessed for such change is happening now at an extremely accelerated and reckless pace.
I’ll close this comment with this final thought.
“For those that resist change, no worries. Change will happen without you.”
Great article. CarMax and Carvanna are new and disrupting models to the auto sales industry. Not to mention Craigslist, and the old fashioned rags for selling your car by owner. Kelly Blue book, as well as others can give you an AVM on your car, and even tell you what you can, or should get on trade-in or outright sale. I presume the CEO’s of traditional models pay attention to these disruptors. No different threat to them than all these disruptors to the real estate industry.
But… Here I sit, an educated person, technically proficient and in the sales industry, and shopped all models of purchasing a car, and bought traditionally – as millions do each year.
No doubt the Auto industry is going through disruption on scale as real estate is.
If the human experience is not as important as disruptors hope, why then are there not CarMax and Carvanna stores on every street corner? Perhaps, when I look at CarMax, and I go shopping elsewhere the sales human I encounter at the Dealer actually added value, and I trusted them more than the sterile, disruptors way of doing things?
Sure, some are fine with a sterile, automated process. The disruptors will capitalize on them. But, my experience says bet on the salesman who knows people, he/she will win – not all the time – but most of the time.
I recently read a Wall Street Journal article about the demise of Sears. The “industry executives” should read this and see if they have the same outlook. There was a comment made in this article that basically stated that Sears had nothing to fear about e-commerce as Sears knew what was best for their shoppers.
Nassim Nicholas Taleb tweeted today “100% of Survival is reliability.” I’ll leave that there.
Good article, Rob. Regarding the NAR lawsuit, I’m perplexed by members of our industry who think the buyer’s agent should be compensated less. Personally, I think the listing agent should receive less. Maybe it’s because the listing is owned by the broker while the buyer’s agent is not contractually obligated to be paid as part of the real estate transaction.
Speaking as someone new to the industry and with a background in innovation at a large creative agency, I have to tell you – I love this blog. Thank you for writing this.
Observation: Isn’t it amazing that we have to have huge conferences with some of the most powerful CEO’s in the world just to dig down and discover the idea of Shoshin?
Advice: You’re missing out on some serious cross-polination to other worthwhile posts (e.g., iBuyers), Rob! You should totally link to the other referenced posts/topics within this one.
Perfect example of what a newbie can show an old timer. I once owned a magazine that also had a shirt company – devoted to reptiles and amphibians. We had plastic totes with the shirts labeled with the names of the animals on them, and expected the pickers/packers to pull the correct shirts out of the bins because we (the owners) knew which animal was a Green Iguana and which was a Bearded Dragon. Orders were messed up constantly. My 7 year old son came in during high ship season – Christmas – and said “Why don’t you photocopy the photo of the animal on the bin so the people don’t have to learn which one is which.” Brilliant process idea from a 7 year old (who did know which was a Green Iguana and which was a Bearded Dragon). But he was clueless on packing and shipping and the idea solved our problem.
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