Who Do You Love? Or, the Limits of Technology

A couple of months ago, I took a taxi for the first time in years. I was at an airport where the Uber pickup was a long walk away, while the taxi stand was right there at the curb where one exits the terminal. I figured, what the hell – the cab is right here.

As I’m getting in, I notice that the cab has all kinds of ads all over the side, rear, and inside the passenger area promoting an app. Apparently, I can hail a cab using this app, use it to pay my fare, rate my ride, see a map… in short pretty much everything that Uber app does.

I do not have this app on my phone. I still have the Uber app on it. Why?

The cab smelled. I can’t identify precisely what the odor was, nor did I want to. But it wasn’t ylang ylang. The driver barely spoke English, and maybe he was a really nice guy, but he came off as surly and unfriendly. There was no small bottle of water in the back seat. No phone charger cable.

The taxicab app might have been awesome. Its features might have kicked Uber’s ass and taken names. Maybe it had advanced AI that predicted where I wanted to go without my having to tell the driver. Maybe it would have educated me on important global topics while I rode. I’ll never know, because I had such a terrible experience that the tech did not interest me in the least.

So, here’s the question: Did the taxicab company build that app for me? Or for the driver?

Whose experience was the taxi company who developed that app concerned with? Who do they love: me or the driver?

Technology is a Tool

I just spent a day in one of the best meetings I’ve had in years with a gentleman who is a real estate tech entrepreneur. He comes out of the consumer internet space, from a company whose name you have heard of.

One thing he mentioned was how in his previous company, every meeting pretty much began and ended with, “What will the consumer experience be?” It could be the most technology-driven meeting with engineers and product managers talking about data transport formats; but the team (supposedly) never lost focus on consumer, consumer, consumer. The greatest tech advance in the world did not matter one bit if it did not improve the consumer’s experience.

Maybe because they worked for a technology company, they knew the limits of technology. You can make the checkout process as easy and as simple as possible, and funny and delightful… but if the product arrives late, arrives damaged, or is the wrong order… the technology doesn’t matter in the least to the consumer’s experience.

He wanted to try and bring that kind of focus to real estate technology.

Maybe because I spent a bunch of time and energy writing about Gary Keller recently, and had a rather large cohort of people deliberately misunderstand me and pile on me for being a ‘hater’, or maybe because of all kinds of opinion pieces “defending” Gary Keller, I immediately thought of that whole line of reasoning from one of the visionary leaders of the industry.

Tech-Enabled Agent vs. Agent-Enabled Tech: Entirely Missing the Goddamn Point

I have said on the record that Gary Keller has identified the problem as the struggle between tech-enabled agent vs agent-enabled tech. I took issue with the solution he proposed: becoming a technology company, some 10 years too late and a few billion dollars short, but the core challenge of remaining “tech-enabled agent” instead of transforming to “agent-enabled tech” remains valid.

Thing is, because I’ve been thinking long and hard about the iBuyer space (coming soon to a Red Dot Report near you!) I realized that we’re all—myself included—missing the point.

The point is not the relationship of the tech to the agent, but the consumer experience with the real estate transaction. And if we’re honest about it for a minute, that experience sucks donkey balls. No one who has ever bought or sold a home is thinking, “Boy, that was just awesome! I can’t wait to do it AGAIN!”

Some of the suckitude is because of the real estate industry. It sucks when your listing agent won’t return your three phone calls asking for an update. It feels bad if you feel your buyer agent is pushing you to choose a house because she wants needs a commission check. And the industry is responsible for that suckage.

Most of the suckitude, however, is because of the dysfunctional codependent relationship between Big Government and Big Finance. Your lender wants to probe Uranus with a high-powered radio telescope, financially speaking? That sucks, but the industry isn’t responsible for that. It’s painful when the local, state and federal governments want you to sign two hundred pages of legalese in triplicate. None of those things are the industry’s responsibility, but we should at least acknowledge and understand the pain and think about how we might decrease the suck.

As the KWRI response shows, however, the focus is on the agent experience, on the agent’s business, on the agent commission, rather than on consumer’s experience.

Take a look at the transcript from the Gary Keller and Brad Inman showdown:

Brad Inman: Here we got a question. At what point do you care about the consumer experience versus the agent experience?
Gary Keller: Well–
Brad Inman: Or do you leave that to the agent?
Gary Keller: Well, no I care about the agent. I care about the agent’s consumer experience.
Brad Inman: And you feel like your technology enabling the agent to create a better consumer experience, or do you actually?
Gary Keller: Yeah, that’s the whole point.

No, that’s not the whole point, not any more than the taxicab app’s whole point is about improving my experience. The whole point is to fight off Uber (whose whole point is to create a better consumer experience). It did not occur to the taxi company that perhaps they need to look at the totality of the consumer experience; they just threw out an app, because Uber is an app. It is not.

Similarly, if brokers started ruthlessly firing every single agent who provides a bad consumer service experience, the whole point of that would be to create a better consumer experience. If real estate people started obsessing about what’s broken, what’s less than optimal, what’s problematic in the overall consumer experience with buying or selling a house, maybe they can arrive at something the point of which is to create a better consumer experience.

If you start from the premise of the agent’s experience because “the agent is my customer” then you’re screwed.

Limits of Technology

When technology is built for brokers and agents, it’s the taxicab company building an app to help taxi drivers get more fares. Technology can be magical, but it can’t work miracles. There are real limits to technology. The taxicab app can’t clean the cab. It can’t make drivers be friendly.

No app can make agents give a shit about the consumer. The best CRM system in the world isn’t going to make an agent ethical. No AI can replace a listing agent having coffee with you to give you an update on what’s going on. Protect ya data all you want, but how does that affect the client whose house didn’t appraise?

In theory, the one thing data and AI can do is to help agents do the right thing more efficiently. Agents who don’t know a market and are too lazy or incompetent to do a thorough market analysis can use an AI system connected to big data to produce a far better pricing report. But if an agent can push a button to produce the magic report, so can the consumer. Paying 3% to someone to push a button seems like a rather extravagant expense to me, but hey, see how that works out for consumer experience.

Here are a few things no consumer anywhere has ever said:

  • “You know, I really hate talking to my agent—if you could provide me an AI that I could talk to instead, that’d be great.”
  • “My agent likes to call me to discuss new homes that have come on the market that might meet my needs, but what I really want is an automated impersonal email from a computer system. Can you make that happen please?”
  • “The thing I hate the most about selling a house is all the data I can get on the Internet at my fingertips. Knowing what homes near me are listed or sold for is a total drag. Is there some way you can force me to contact an agent who will put me on an AI-powered marketing system instead?”

Gary is correct that agent-enabled tech companies use agents because they have to. But in part, that’s because those companies are obsessed with the totality of the consumer experience. If an agent helps to provide great service and improves the overall experience, they’ll use agents. If removing the agent would provide a better totality of consumer experience, you bet your ass they’ll remove the agent—just like Uber would remove the driver if that would lead to a better overall consumer experience.

That tech companies like Zillow, Redfin, Opendoor, and others continue to have agents in the loop means that they recognize the limits of technology. The real estate transaction is complicated, expensive, and stressful. They recognize that having the (right) agent in the mix improves the totality of the consumer experience.

Just like advanced AI technology, data mining out the ass, big and bigger data, the agent is a tool through which these companies try to improve the overall consumer experience. If providing a pink bunny with every purchase would improve the overall consumer experience without making them go bankrupt, I’m convinced that the tech companies would find a way to do just that.

Shouldn’t brokerages and real estate companies and agents learn something from that example?

The Lion Over the Hill is Always and Forever the Consumer

We in the real estate industry are so concerned with the next threat, the next Lion coming over the hill. It’s Microsoft! No, it’s Google! Wait, it’s Zillow! Oh, today’s it Redfin and Opendoor. It’s those nasty discounters!

It’s as if we’ve all forgotten that the lion over the hill has always been, is today, and forever will be the consumer. Once in a while, that lion has to roar to remind us jackals who’s who. The recording industry thought it was the lion against the jackal of MP3; the consumer reminded them who’s who. The hotels thought they were the lion, and they had awesome technology to boot to compete against AirBnB; the consumer reminded them what’s what. Microsoft itself thought it was the lion, with its control over the operating system and software, and needed to put the jackals of Dotcom companies in their places; the consumer roared. When Amazon, Google, Facebook, and whoever get complacent and forget their place, the lion over the hill will remind them of the laws of the marketplace jungle.

It’s inspirational to some that Gary Keller is “standing with the agent” and protecting them from the jackals of agent-enabled tech companies. I understand. I sympathize. But the whole affair is missing the point. In the linked article above, Adam Hergenrother writes:

Gary Keller has put his agent partners first by building a platform that will allow each individual agent to be their own Netflix in their individual markets.

As we move into this next phase of the real estate industry (get ready, it’s coming!), agents get to choose the partners they’ll bet their careers on. I choose KW because it has proven time and time again that it deeply cares more about me and my business.

Netflix itself doesn’t care about the Netflix software, except to the extent that it provides a better consumer experience. Netflix was mailing out DVDs long before it built any software, because that was a better experience than driving down to Blockbuster. Netflix built software because streaming is a better consumer experience than messing around with DVDs. I’m sure they regretted having to lay off hundreds of mailroom workers, but the whole point of Netflix was not to provide rewarding careers for DVD shipping workers. If Netflix could provide a better consumer experience profitably putting on live puppet shows in your living room, Netflix would figure out a way to do just that and ditch their software tomorrow. (Or else, Netflix too would go the way of buggy whip manufacturers: the consumer is the lion.)

The next phase of the real estate industry turns out to be the same phase it was yesterday: delivering consumer experience. Is technology a key component of that? Of course it is. But technology is not the end, but the means to an end. The question then is, “What is the end goal?” Adam Hergenrother, Gary Keller, and most of the real estate industry appears to believe that the end goal is the agent’s paycheck and career. KW of course, but NAR is now the National Association FOR Realtors and MLS after MLS have “Help our members be successful!” in their mission statements. These days, even Zillow is all about keeping the agent at the center of the transaction.

It might do all of us a ton of good to recognize that the end goal is not the careers of real estate agents. The end goal is to deliver the best overall consumer experience possible at the highest profit margins possible. Everything is a tool to deliver that experience… including technology, data, and the paycheck and careers of taxicab drivers real estate agents.

Who do you love?

-rsh

16 Comments

Join the discussion and tell us your opinion.

  1. I am “that” real estate agent. My whole focus is always on the client experience. Sell 25-30 homes a year, but increasingly find myself wondering what if? What if, I decide to build a team? What if the industry is going past me, and I will be too late to recognize? Should I join a more forward thinking brokerage?….and finally, most importantly, will the consumer be served? All I do know, is that I provide valuable insight to my clients, and more often than I care to share, I PREVENT buyers from purchasing a “lemon” while providing my sellers a realistic opinion on the value of their home. I have been wth the same brokerage since I started. Think I made the right choice, and if I do move, it will be one time, and one time only (hopefully…) The industry, as a whole, has a “turn and burn” strategy, and I just cannot run my business that way, while sleeping at night. Where is the future for me? The client matters to me, and while I will never likely build some huge team, it matters to me, personally, that I am entrusted with the value of my clients most important asset, whether a seller or a buyer. Why, on all the blogs, etc….does this seem to be a forgotten trait? This particular post, hit a nerve…..where?….exactly….?….is the end user, the client, in all the discussion about real estate? My family counts on my ability to sell homes, to put food on the table, etc. It matters to me, personally, that my clients feel good about working with me. In a bad market, it is easy to find “deals” for clients, and prove it a few years later. In a good market, it is much harder to provide value, but still very possible, by tracking neighborhoods, and understanding just what is going on, where/when. The human element should never be eliminated from real estate, as many realtors take a very personal approach to the business. I am afraid, however, that the team/big business approach to real estate has lost the focus on the end experience. The best way to insure our collective irrelevance/demise, as agents, is to quit focusing on the client. This matters more to them, than it does to us. We, as realtors, are helping them spend their money, not ours. How do you feel when someone is “selling” you on the next/greatest/opportunity of a lifetime? While I remain uncertain, that I can compete in the new world of real estate, I am quite certain that my morals will continue to provide the best experience for my clients.

  2. Well said, Mr Hahn. My post today about Compass gets at the same thing: it’s about the consumer.

  3. Thanks, Rob. I was wondering if/when any of the market observers would state this.

  4. Rob, very well written and reasoned … thank you. I’ve been in this “experience” camp for a while now and it’s a sad reality that *most* of the industry would answer exactly how Gary Keller did at ICSF. I was presenting at the real estate editors conference (NAREE) recently with the CEO of one of the leading instant offer companies. And from the audience I asked the same question: “whom do you serve?” Investor, buyer or seller? And for all his brilliance on the VC metrics of his business, the answer was an “ah-um-well” ….”we’re passionate about the customer experience.” From both personal and professional perspectives, it appears to me more like a “Blockbuster Video” case study is relevant. Their “Be kind, rewind” for example …. outsourcing their tasks to to the customer and throwing in a dose of guilt on top. Neglecting the true paying customer is a deathly peril for any business and with a few notable exceptions, everybody is partying like it’s 1999. And, by the way, we’ve not even touched on the crisis in truly affordable housing affecting tens of millions of Americans in just about every location. Rock on, Notorious One.

  5. More than 20 years ago I predicted the demise of RIN. Why? Because it claimed to exist at that time to keep the “Realtor at the center of the transaction.” Then some time after that, while others claimed “the King” had arrived, I also predicted the failure of Realtor.com. Why? Because it was operated based upon a Realtor-centric model. And now we face numerous companies who have openly claimed that the agent – as in the same Realtors – are their customers. They are all placing big bets on the agent as “the future of real estate.” And as such most all of the technology today is designed to be sold to the industry and not for the application of improving the consumer experience.. Once again, I predict this positioning will ultimately fail.

    So I agree with you Rob. Huge “amounts of ammo are being shot” but the real target is being missed time and time again.

    When the gate keeper between your business and the consumer is made-up of 1.3 million “random, independent real estate agents nothing substantive will ever change for the consumer experience. Nothing.

    We all know examples of great, predictable consumer experiences but no where on that list of companies will likely be a real estate brand. That is because most of the supposed brands in real estate are nothing more than names applied to networks of random, independent real estate agents that do what they want first and the consumer comes exactly next.

    At at the end of the day, sadly, no matter how good the technology is, it will never remedy the serious dilemma being faced by the real estate industry today.

  6. This is a great article! You’re honing in on the question we should all be asking: as agents and higher ups what can we do to make the experience of buying and selling a home pleasurable for the consumer? Given, of course, everything we do must be legal and ethical.

  7. I’m with you and follow what you are saying. Always an excellent read. Thank you.

  8. Bravo Rob!! Well said!! We have lost sight of this being a people business! You are voice of reason

  9. You compare, Taxi, Uber, Netflix that cost peanuts to the consumer to use, versus purchasing a home that is way much more expensive, much more serious, that needs a serious calculations and decisions.Taking a ride on a Taxi or an Uber, or renting a movie from Netflix is a daily routine for many people so they can compare a good low cost service. But, most people will buy one house during their lifetime maybe two, so they have no knowledge what is a good service in real estate.

    Real estate is a very complicated industry, with many laws and regulations.Most people that I know, will never sell or buy real estate without the assistance of a real estate professional or an attorney.
    Real estate is a people business if you like it or not and no technology can beat the human touch.Like in any other industry, you have people who will give you a great service and a bad service. It does not depend on technology, it depends on the person you are dealing with.

    Why don’t you ask the Lion what he really wants to eat. Once we all know what the Lion wants to eat, only then we can cook the right meal for him. I think that in this case, this Lion does not know what he wants to eat.

    1. If you dont know what the lion wants, perhaps you shouldnt be in the business of working for lions.

      1. I am a real estate attorney for over 35 years. The lion I am talking about wants a real estate agent. The lion you are talking about?

  10. Rob,

    Thank you again for your insight. I had an Aha moment reading this post and will be discussing, and more importantly implementing, my takeaways with our team.

  11. Thanks for the great reveal.
    I have a part of the RE industry in Central Florida for 35 years.
    The buyer and or seller is the only reason we are still needed.

  12. Love it Rob – well said, again. And I think you already know my views on this… if we want to change the consumer experience – if we want to (for our own survival) become truly consumer-centric… we must change the model that has created our self-serving agent-centric industry in the first place. As I believe Einstien put it… “We cannot solve our problems with the same thinking we used when we created them.” So my belief is that we must stop seeing our industry as a “Commission-only Sales Industry”. And start seeing ourselves as “Professional Service Providers”. Which changes everything. Then all we need to do is get on with doing what our clients engage us to: Protect & Serve THEIR best interests, while helping bank the most from the sale of their property… which can’t be done on the commission-only model.

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