It's a war out there as many dotcoms fight to stay in business. Full of battlefield bravado, many real estate dotcom CEOs refuse to show their wounds. Others are lopping off bleeding limbs without anesthesia. Some will survive this market shake-out and come back better and stronger. Others will perish on the field due to having their supply lines cut off. But the finger of blame is being pointed everywhere but at themselves. The simple truth is that you have to have a business plan that is nimble enough to adapt to changing market conditions. You have to have a product people want.
Some that are being carried off the field in a blood-soaked litter say it comes down to money. They didn't raise enough money fast enough. The perfect summation of this thinking is the comment made by Mortgage.com's CEO in a recent press announcement that it would shut down its lending operations and sell its domain name to raise money. He said Mortgage.com failed "to raise sufficient capital to reach profitability."
Excuse me? It had a business plan. It got funded. It went public. Could it be the plan or execution was faulty? This seems to be a common problem in the dotcom sector.
Others companies claim that they are being squashed unfairly by competitors, which may ultimately prove to have some merit. Can it be coincidence that almost every company that has gone up against Homestore is licking mortal wounds? While the Department of Justice steps over an increasingly higher pile of bodies in its slow investigation of Homestore, it has come to light that some companies feel that Homestore has created an unfair market advantage through its Gold Alliance listing agreements. Companies who created business-to-consumer models based on being able to get the verboten listings are all bleeding red ink. One can only guess who made the call to the DOJ reporting Homestore's aggression, because the list of suspects is long indeed.
The only certain innocent is HomeAdvisor, who has had more than enough of the DOJ by its association with Microsoft. And, HomeAdvisor is sitting comfortably in a trench protected by $100 million in sandbags. How did they survive the listings wars? They figured out the b-to-b play before anyone else. The reason HomeAdvisor isn't getting killed is because they never competed against Homestore with Web sites, school reports and other lead generation tools. And they had the money to buy listings from agents. Instead, they have created an ingenious suite of application services to serve Realtors without having to make a single sales call. Ironically, HomeAdvisor applications may end up on most transaction platforms, including Homestore's eRealtor. Watch it happen, and remember you read it here first.
It took a long time for the consumer portals to figure out that if Homestore wasn't offering to buy them, that they were already dead in the water. They just didn't know it, and they didn't react quickly enough. The consumer portals give free peeks at listings with an opportunity to sell some ads, but everybody knows now that you can't get rich off ads on the Internet, so you have to have some other model to make money. Aha! Web sites for real estate agents! That'll work. And it should have, in theory. Only nobody counted on big bad Wolff blowing their houses down.
The problem soon became obvious. Agents, like consumers, want to be linked with the biggest sites, and they particularly want to be able to show homes from their own MLSs. But many agents found that not only could they not link their MLSs to their sites because of Gold Alliance agreements, their own brokers wouldn't allow them to post listings on sites other than Realtor.com. The broker - the same one that got rich from their stock options in Homestore that they didn't share with their agents (and I have yet to find even one broker who did share their HOMS stock sale proceeds with their agents) - has to give permission for the listings to be shared with aggregrators in many MLSs organizations. That's good for Realtor.com. Bad for everyone else.
HomeSeekers has weathered such storms before, and it does the best job at selling comprehensive marketing tools for Realtors aside from Homestore. It also has an asset that other companies want - lucrative MLS information management contracts that seat 100,000 agents. I have a feeling that their dance card at the upcoming N.A.R. convention will be full as companies who are trying to survive against Homestore vie to get their hands on those assets. Ditto for VISTAinfo. But even HomeSeekers is feeling the strain. With its stock gasping for air under a dollar on the NASDAQ, the company is having to fend off vulture attacks from Homes.com. According to some reports, Homes.com is violating the restraining order that HomeSeekers has against it, in relationship to its lawsuit to stop Homes.com employees from soliciting HomeSeekers customers by telling them that HomeSeekers is going out of business
Far from it, says John Giaimo, HomeSeekers' president. He says the stock is low right now because the infrastructure to create its year-old MLS system was costly, and the company is only just now able to start receiving payments associated with its contracts. Better days are ahead, he says. But did HomeSeekers make the switch from b-to-c to b-to-b soon enough? Only time will tell.
It's pretty nervy for Homes.com to keep after HomeSeekers when their own company has just announced the layoff of 50 people. Layoffs aren't layoffs anymore, by the way. They are redundancy corrections. That's the word from Homes.com, who gave that explanation as the reason for relieving 50 people of their jobs. Good little reporter that I am, I called Jay Westmark at Homes.com to ask him about what I had heard - that the layoffs were closer to 120 and that I got that from an MLS organization who had been told that by a Homes.com salesperson. The salesperson's explanation to the MLS was that Homes.com is getting another round of funding and that the investor has asked Homes.com to trim a little fat. Funny, there wasn't any mention of an investor in the official line. "The number is 50. Give me the name of the salesperson who said that, and we'll make it 51," replied Westmark in an e-mail. He's joking, I'm sure. I never reveal a source.
Reports are also coming in that Homes.com's customer service, usually one of the first lines of defense to crumble in a profitability battle, is also having trouble. Complaints about the latest release of PREP, the company's productivity software for agents are legion. So are complaints that former HomeSeekers customers aren't being treated right at Homes.com.
How do I know? Hint number one: If you are a dotcom having financial trouble, neglecting customer service is just about the fastest way to spread the news. Lamented one Homes.com Web site customer to Realty Times' tech support, "I switched from HomeSeekers to Homes.com and now I'm not getting any service." That's okay, Homes.com. We took care of it.
Cyberhomes and Realestate.com aren't faring any better. VISTAinfo, whose stock isn't trading much above a dollar, is about to see its ship come in with the advent of its new MLS information management upgrade, RE/Xplorer, and technology solutions for brokers keying in on broker reciprocity services. The good news comes too late, however, to save Cyberhomes, VISTAinfo's consumer arm. What was Cyberhomes fatal mistake? While Cyberhomes valiant president John Mosey stuck by the MLSs, they didn't stick by him. He was stabbed in the back by the very MLS organizations that Moore Data/Cyberhomes first put on the Internet and gave wide-spread advertisement to listings - without gouging agents with high fees. The mistakes Cyberhomes has made throughout the years cannot be covered in one article, but bad business planning and execution was only exacerbated by not devoting enough resources to keep its one time second place advantage.
A source says that Cyberhomes has been unable to find a buyer, and one of the Internet's original listings portals will quietly wind down sometime in mid-November. VISTAinfo is doing the right thing to shut down something it can't save. It may be losing an arm, but there's still plenty of swing left in the other. As the MLS information system provider for almost half the agents in the U.S., VISTAinfo will be all the application service providers' new best friend, says COO Howard Latham. He has recently announced that his MLS system will enable MLSs and brokers with a RETS ready platform that will facilitate listings and apps in one easy software solution.
Others may wish they had an MLS arm to save the day. Realestate.com isn't paying any bills except payroll and rent, according to a company employee. Realestate.com's president John Perry told Realty Times that they most certainly were paying their bills. Unfortunately, we have been told by some of their vendors that their bills aren't being paid.
Now that I think about it, ditto for Websuite.
As the 2000 REALTORS Convention and Expo approaches, I can only wonder what the future will bring for some of these companies. Some may be in the dotcom deadpool, but they are also poised for rebirth. Others don't have a prayer. Let's see which ones come back to life and which ones don't.
