Shiva Wept: NAR Reach 2019 and Industry Mindset

A couple of weeks ago, NAR’s Second Century Ventures announced the 2019 class of companies in its REACH program. What is REACH? Here’s the official description: “The REACH® accelerator focuses on providing early- to mid-stage companies with access to NAR’s industry expertise, influence and key relationships as businesses launch into the trillion-dollar real estate space.”

Now, last year, I wrote a post about 16 startups that presented at the NAR Innovation, Opportunity and Investment Summit. I referenced a post I wrote back in 2010 called Shiva, The Destroyer. It remains valid today as it was back then. The core concept is that innovation is fundamentally destructive; creative destruction that innovation brings is one reason why capitalism is the best economic system ever developed, despite its flaws.

So I wrote:

What I find amusing from time to time in real estate technology is how many companies claim to be game-changing, disruptive, innovative… and not one can answer a simple question: “If you are successful, who do you put out of business?”

The answer last year was BoxMLS, as the sole company in the list of 16 that would put anybody out of business if it were successful. Let’s see if any of the REACH 2019 companies can answer that question.

The Companies

From the press release:

The companies chosen for the 2019 class are:

  • Amarki(link is external)A seamless, automated marketing platform that helps real estate professionals integrate their favorite systems in one place;
  • Curbio(link is external)Helps agents deliver exceptional results for home sellers through ROI-focused, pay-at-close renovations;
  • Evocalize(link is external)A platform that makes sophisticated digital marketing simple, and helps brokerages and agents collaborate to generate demand when and where it’s needed;
  • Kleard(link is external)Kleard is a safety and productivity app that provides real-time verification for open houses and showings;
  • RateMyAgent(link is external)A digital marketing tool designed to help agents easily collect, share and promote verified client feedback;
  • reConsortia(link is external)An open, crowdsourced referral consortium that builds transparency, enhances professionalism and provides an improved customer experience; and
  • Staging & Design Network (link is external)The first-ever online shared rental pool for home furnishings built for the real estate and home staging communities.

At first glance, not one of these companies put anybody out of business if they’re successful.

At second glance, it is amusing and surprising how often the phrase “helps agents” appears in the description. Four of the seven says they help agents, help real estate professionals, helps brokers. The remaining three might as well say they help agents, brokers and real estate professionals with something or another: agent safety, referral platform, and home staging furniture rentals.

In a way, this is not at all surprising, since Second Century Ventures is a division of NAR, whose mission (today) is to be the National Association FOR REALTORS. Of course SCV will only select companies that look to help REALTORS.

I am also certain that those companies are filled with really smart people who see an opportunity to meet an unfilled demand, or to do something more efficiently. I’m sure they do in fact help agents, brokers and real estate professionals be more productive.

But it is 2019, and I admit I am a bit surprised that we continue to see such a focus, such an emphasis, on an agent-centric worldview. Not one of the companies uses the word “consumer” anywhere in its description. Curbio at least mentions “home sellers” but then again, Curbio makes clear that is goal is to “help agents.”

Maybe this issue is on my mind since I just wrote about Realogy’s Q1 results. But what the NAR REACH companies say to me is that the mindset of the real estate industry still remains firmly agentcentric. Maybe that’s good, and maybe that’s wise, and maybe even if that is neither good nor wise, NAR has no choice but to be member-centric. But it’s worth thinking about.

The Agentcentric Mindset

It goes without saying that the weight of evidence today is on the side of the agentcentric mindset. That’s how things have worked for the past few decades, and even in 2019, we have Compass coming out with full-throated support for the agentcentric worldview despite being a VC-based darling taking over major urban markets by recruiting top agents left, right and center.

At the same time, I can’t help but wonder if being so agentcentric isn’t a mistake. Here’s what I wrote in the VIP members-only post on Realogy:

If Realogy can somehow change its mindset from “throw goodies at agents to get them here” to “much better customer experience,” then it can change course and win out in the end. The months and years from now to then will be dramatically painful for Realogy and its investors, true. But at least there’s a chance.

And so we are perfectly clear, by “much better customer experience,” I do not mean the hoary adages of real estate industry about client service and fiduciary duty and local expertise and we treat you like family and so on. I mean the totality of the experience for the home seller and the home buyer. It’s Zillow’s “Push Button, Magic Happens” internalized by a real estate brokerage.

The world has moved on. If it isn’t obvious to you, it’s because you have a vested interest in the world not moving on. Give it a few years and it will become clear to you that the world has indeed moved on.

Since most of the business today is still being done under the old way, it is smart business strategy to help agents and brokers do whatever it is they want to do. But it is smarter business strategy to think about what comes next. And I’m not sure I see signs of a lot of companies from brokers to MLSs to even technology companies that they’re really seriously engaging in that kind of thinking.

As I write this, I’m sitting in session at a First American event where Eddie Oddo, VP of Corporate Business Solutions, is talking about eClosings and Remote Online Notarization. This is a huge company, a public company. And they’re seriously engaging in “what comes next?” strategies. A lot of it is incremental, which is smart, but underlying that appears to be a mindset that says, “the world has moved on, and consumers are going to demand change.” Instead of fighting the change, the strategy appears to be to try and guide the change.

Smart. Very smart.

Shiva the Destroyer

What I’d like to recommend to the industry is to emulate First American and start thinking very seriously about what comes next. Do not try to fight the change or resist it; that’s useless if the consumer is going to demand it. Better is to try and guide the change so that whatever comes to be is effective and efficient and doesn’t create more problems than it solves.

A large part of that mindset shift has to be one that embraces Shiva the Destroyer. Sometimes, the old growth has to be burned down before new trees can grow. Creative destruction is not to be feared, but to be embraced and guided such that creation > destruction.

For residential real estate today, the guiding principle (at least in my mind) is what I wrote above: much better consumer experience. It can’t be about helping agents and brokers first, and then benefits for consumers second. It has to be much better consumer experience first, and then benefits for agents and brokers second.

This will be the next evolution in philosophy. We went from brokercentric to agentcentric when Re/Max revolutionized the industry in the 70s. For years and years, many people in real estate talked about moving from agentcentric to consumercentric. This was a popular meme in the a few years ago, as an example. But we haven’t really seen that actualized yet within the mainstream of the industry. It’s time we see that actualization.

Because the alternative is that consumers, through third parties, will force that mindset shift on us with unpredictable results. Better that we copy First American’s approach and embrace creative destruction so as to guide it to be more creation and less destruction.

Shiva wept in 2019… but that won’t last. Eventually, Shiva will laugh. May we be laughing along with him.


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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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9 thoughts on “Shiva Wept: NAR Reach 2019 and Industry Mindset”

  1. If the broker/franchise play is truly to win the consumer — and I believe it is — then I believe those people should be working their ass off to clone/copy/improve upon Knock’s buy new & trade-in the old service. Literally everyone I’ve shown it to says, “Why isn’t that in Seattle?”

  2. Great article Rob.

    As long as this industry persists in being “anything but consumer first”, it will simply be a ginormous target for true and total disruption.

    Fact. There are much better ways to “do real estate” today than what the ” industry is serving up to the consumer”, but they are not yet available to most consumers. Note the use of the very limited time frame of “not yet.”

    And so the destiny of all of these agent centric franchises, networks and brokers looks very similar and is definitely not good. As a result of their collective inability to herd 1.3 million ICs into an agreed upon consumer-first focus and experience, they can all look forward to experiencing a very similar end. Just like a series of dominos set standing in a row, one will be pushed and the others will have no choice but to suffer the fall.

    I used to think this industry was like most others in that it had a tipping point with regard to change. But now, I see this as an industry that has already tipped. And the most concerning part about that revelation, the industry doesn’t even know it yet.

  3. So, what real estate agents really do anymore? not much.Real estate agents have simply become messengers just doing what they’re told by their clients.
    Many real estate agents are not happy in the way things are progressing with technology.They realize they need to step up their game to provide value to the transaction but most are lazy and have no idea even where to start.They are basically taking a listing post it in their MLS and waiting for offers.They are not marketing the listing because it dose not matter for the listing agent who sells the property, the commission is guaranteed.Most real estate agents do not care o the consumer. They only care on their commission checks and would do anything and everything to get pay.

  4. First American is a great company to have worked with. They have grrrreAT data/database wonks and wranglers. If I would have thought 6 years ago that I would find so much FUN in calling into FirstAM on certain support levels :)…. Because the assigned account rep would get you to wonk/nerd out in new ways, concerning new data points to target for marketing. They can get you geeked, right alongside them. They may become impatient, in this nice WonkGod way and say “you already have that, but there is a trick, do you want me to show you how to load that” ( meant as an offer to help load it onto tables….That’s dedication).

  5. The problems are not the agents. The problems are the lenders who take their time and making it miserable experience for buyers and sellers.

  6. What if NAR adapted to these changes by changing their mission. What if NAR weren’t just a trade association for Realtors, but also real estate tech and, :O!, iBuyers?

    These are industries that employe hundreds of thousands of people, and would allow NAR to hedge their bets and de-incentivize their agent count fetish.

    Maybe tech is allergic to something as antiquated and lethargic as a trade association, but seems like lots of roles someone like NAR could play in that space.

  7. Nail on the head again, Rob. No wonder our company wasn’t selected for NARReach 😉

    The gap continues to remain between consumers and brokers, and everyone wonders why the industry reputation is fatigued as consumers conduct a lot of their own activities separate from the broker. Even NAR’s new initiative (which I thought was ‘Member-Consumer Engagement’) on the marketing side is about the “Story of the REALTOR” which again, is inward looking.

    • The other challenge is actually building a business in this space. So many tools build for the associations because they pay. Others build for the brokerages.

      The fact is that so few agents make enough money to go out of pocket for tools, you’re stuck selling in a very crowded space, with customers who are very reluctant to make investments for innovation.

      Obviously the untapped route is providing value to consumers. If they find value in your tools, you can then attract the other side (brokers). Challenges here are obvious – Zillow and Redfin dominate, so again competing against multiple 800lb gorillas. This view, IMO, explains a lot of the lag in innovation in the space, especially regarding consumer-focused.

  8. I had the exact same thought when I saw NAR’s REALTOR Magazine headline: “7 Tech Companies Poised to Disrupt Real Estate”. I thought, wow, NAR is going to talk about disruptive tech! Instead, it was an announcement of their Reach class doing some agent-centric new tricks, none of which are disruptive.

    There are VERY few companies out there trying to completely reinvent RE transactions. Mine is one, but it’s clear it’s going to be difficult to overcome the inertia of the status quo. Sam DeBord wasn’t too happy with my challenge to it, telling me in a tweet last year “Bull in China Shop rarely plays well to this crowd.”

    If I had the ability to post a video at the end of my post like N-ROB does, it’d be from “The Great Wall”, with me as the Tao Tei trying to breach the wall. It’ll take a lot of folks like me to overcome, but we will.

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