Zillow, the new online customer service portal that is supposed to rely heavily on real estate brokers while simultaneously putting them out of business, may Segway it's way into real estate history.
For those who have forgotten, post-9/11, the development of the Segway was so top secret that pundits were speculating that it must be some kind of stealth hovercraft that turns invisible as if it were hiding under Harry Potter's magic cape.
Code-named "Ginger" (which puts an end to the who's hotter -- Mary Ann or Ginger debate), invented by Dean Kamen and backed by the wunder-capitalist John Doerr, the force behind putting Netscape and Amazon.com on the Internet map, the Segway was hyped so much as a life-changing product, that Kamen once said the Segway, "will be to the car what the car was to the horse and buggy."
The Segway turned out to be a unique upright scooter which is powered by the weight of its human navigator. The device responds to gyroscopes that propel and turn the scooter.
By liberating pedestrians from using 4000-pound vehicles "to haul their 150-lb asses around town," as Kamen colorfully put it, the Segway should be in every consumer's home.
But, design problems had turned the Segway into no-way for many communities. It went too fast (12 miles per hour) to be safe on sidewalks and didn't go far enough on a single charge (11 miles.) It also cost too much for the average consumer to ditch their car (nearly $5,000 on eBay) and it was about 40 pounds too heavy, according to one futurist.
By the end of 2002, Kamen's company had spent tons of money on lobbyists so that 32 states and the District of Columbia would allow Segways on sidewalks and trails, following a speed-limit of 8 miles per hour in some cases. Even the U.S. Post Office gave the invention a try, but feedback from mail carriers showed the device didn't save time because the carriers couldn't sort mail while driving (the Segway requires two hands for steering) like they could while walking and workers had to return to their cars to recharge the battery often. The Post Office only ordered 40 -- to use at distribution centers.
Then the unthinkable happened -- in December, 2002 the city of San Francisco barred Segways on footpaths and cycle paths. Seems there was one constituency that the invention offended -- fat haters. A rising tide of protesters pointed out that if people aren't walking in a pedestrian-friendly city like San Francisco -- when will they walk?
Today, the Segway is sold all over the world, but not to the consumer segment it was designed for -- unless you count the golf-cart division. (Help, I'm in the rough and I can't giddy-out!)
While the Segway can't be called a failure, it was still light-years ahead of its time, and the world community may take years to catch up to the inventor's vision. The fatal flaw? Kamen was so busy being contemptuous of cars that he overlooked how he was treating feet. That's an incredible oversight, but not when you consider the genesis of the Segway -- a futuristic and highly functional wheelchair.
Will uber-confident Zillow founder Rich Barton make the same mistake?
Barton was the CEO of Expedia, and most of Zillow's management are alumni of Expedia and insiders from other John Doerr-led IPOs of the 90s. They're hoping to apply the Web in order to lower consumer costs to buy and sell real estate in the same way they successfully did for the travel industry. Expedia is a huge portal that combined flights, cruises, hotels, car rentals, and more all on the same site. Consumers can explore and book their own travel arrangements, saving them money on deal packages.
Speculation is rampant that Zillow will be a FSBO site, that it will combine broker listings with FSBO listings, or that it will be a transaction management site for home sellers.
A good guess is that it will electronically perform all the duties of real estate agents that don't require licensure -- that's just about every activity except fiduciary-level advice, including advertising. A hint that this might be true - Barton has said that real estate service needs to be "unbundled," which would only be convenient for him if he were planning to automate and sell some of those services electronically.
Benchmark Capital general partner Bill Gurley, who sits on Zillow's board, told the Wall Street Journal, "As with any industry, when the Internet comes along, there's a lot of people interested in protecting their processes and expectations, rather than have them be as they have been in the past. In this case, there's a lot of technology and agents -- and I don't mean real estate agents -- in the market that would like to drive it toward something better."
Most of the job listings for Zillow is for programmers, suggesting that the infrastructure will be huge.
The evolution of the Internet is advertising and communication. Barton has said that the company will make money from advertising. He also has said that Zillow won't be like Expedia and that he hopes brokers will use Zillow as a marketing vehicle, possibly like the blog-ad site Curbed.com.
It's interesting to note that among the links on Curbed.com is Property Shark, a company that gives New York City property records for the present owners, title history, taxes, violations, and permits, information that is a mainstay and value-add on most MLS listings.
Maybe that's what we're anticipating in Zillow -- a new kind of real estate advertising hybrid that combines blogs, advertorials, property information of county records, classified ads and video listings, but on a national scale. Presumably, having access to this detailed property information enables buyers more informed to make offers directly to sellers - on a streamlined transaction platform.
Let's not forget that this is the age of the citizen journalist, the amateur television star, and the music-sharing entrepreneur. No longer is professionalism required for any job - all you need is the right electronics and you can be your own rock star. Why shouldn't homeowners be empowered to blog their way to closing?
Barton has warned that brokers may have to rethink what they charge -- with the Internet enabling consumers to find homes in less than two weeks. Barton has told the Wall Street Journal that in six months, the company will "beta" test a "version of a set of Internet tools designed to help people buy and sell homes more efficiently."
He also said that "there's an unsustainable disconnect" between what agents charge for their services and what consumers perceive as the value of those services.
And that could be his Segway into go-away. Brokers don't like smarty-pants technology companies telling them what to charge consumers, and they surely don't like the idea of paying them advertising dollars to companies' whose end game is to put them out of business. Maybe he forgot the lesson of Microsoft's HomeAdvisor - a company that was set to go public, but ended up being absorbed back into it's parent's Website because its leaders told the real estate industry that brokers shouldn't be in charge of the real estate transaction. As one broker put it - "What should we hand control over the transaction to you?"
Expedia, Barton's brainchild, was "originally created within Microsoft Corp. when Mr. Barton worked there in the mid-1990s, and later became a unit of IAC/InterActiveCorp, New York, which recently completed a spin-off of Expedia to shareholders," explains the WSJ.
IAC's CEO is Barry Diller, and it owns Realestate.com and LendingTree, companies with a few notions of their own of how to take over the real estate industry. Yet, Diller is conspicuously silent in the hoop-la surrounding Zillow.
Unlike the blind-sided travel industry, the real estate industry has been sufficiently scared by the prospect of even more competition on the Internet that it is preparing for Zillow, even though exactly what Zillow will be is still a closely-held secret. We don't know what Diller is planning, nor the rest of the real estate pantheon -- Cendant real estate brands, RE/MAX, and powerful brokerage associations like the National Association of Realtors and The Real Estate Alliance, not to mention the large brokers such as NRT or Homeservices, but we do know that many are working behind the scenes to spruce up their websites, strengthen their alliances, merge, spin-off their units (Cendant real estate) and much more.
Zillow offers a number of "thought-provoking concepts that simply do not exist in the current real estate marketplace," writes industry consultant and futurist Jeremy Conaway in an article for the Houston Association of Realtors .
He writes a list of competencies Zillow plans to have:
- Zillow.com is seeking an experienced leader to build a world class customer service organization.
- The organization will comprise both internal and outsourced teams and will have a passion for making data-driven decisions to continually improve our overall customer experience.
- The organization seeks to: Create a consistent customer experience across all touch points that becomes a key differentiator for Zillow.com. As such, you will be a key voice of the customer for our company.
- The Company will: Hire, develop, manage and retain a large and growing organization consisting of operations (web, e-mail and phone support), QA, and Training.
- The Company will: Develop, own and implement a data-driven customer service framework that relentlessly drives out costs while, at the same time, increases Zillow.com's customer value proposition.
- The Company will: Evaluate and implement strategic outsourcing and off-shoring initiatives for selected components of customer service while simultaneously increasing the effectiveness of the domestic inbound and support call center.
- The Company will: Develop overall customer service model that will enable Zillow.com to rapidly scale as a profit rather than a cost center.
- The Company will: Drive the implementation of new technologies (Interactive Voice Response systems, web-based customer solutions, etc.) for a global market.
- The Company will: Define excellent training processes in the customer support operations in a rapidly expanding product base.
- The Company will: Implement strategic initiatives in customer service delivery that can complement the pace of company's new product offerings.
Conaway advises, "The moral of this story: If your brokerage is not working on these same competencies, objectives and skill sets, you are not keeping pace with today's real estate industry."
But the warning could go both ways. Like San Francisco didn't want Segways wheeling over its pedestrians, perhaps the real estate industry will say, "Don't tread on me," to Zillow.com.
