A process by which a product or service takes rootinitially in simple applications at the bottom of a marketand then relentlessly moves „up market‟, eventuallydisplacing established competitors.An innovation that is disruptive allows a whole newpopulation of consumers access to a product or service.
In 1965, AMA had 75% market share of all doctors, today 19% market share. Specialization Disrupts Generalization
• ½ of MLS subscribers in Seattle are no longer REALTORS®• ½ of MLS subscribers in Atlanta are no longer REALTORS®
Changing Consumer Expectations• Everything on Demand – Xfinity, Pandora, Netflix, Amazon• Privacy – Young People Dont Care o Their life is on Facebook, Twitter• By December, Facebook will have 1 Billion members• Ego Generation – how many friends you have, how many likes, how many followers• Reviews – IMDb rates movies, Yelp, Trip Advisor, Angies List, Zagat, Edmonds for car• Y Generation – no voice mail, no land lines, no email, watch TV but not on the TV
63% + Under 45 years of Age42% + Under 35 years of Age
Is Home Ownership being deferred to rental life styles?
Generation Rent: The $11 Billion Commission Shift by 2015 • 463,000 lost home sales or about $4.2 Billion in lost commissions. • 150 Million leases will be signed, worth $6.8 Billion in commissions. • If a brokerage offers only sales, $11 Billion in commissions will be out of reach. • How will members market to the “Gen Rent”?
June 2011 Hitwise Report Rent.com Apartment Guide Apartments.com ApartmentRatings.com www.apartmentdata.com Apartment Home Living 6 of the top 18 sites viewed by Houston Area consumers are related to rentals.
HP keeping up in the changing Tech Industry • Will HP, the “King of PC Sales”, spinoff its PC business? • Will HP shutdown its tablet and smartphone operations?
Rent nightly from real people in19,716 cities in 196 countries. Airbnb.com – Air mattresses and donuts Listings worldwide from a room to a home Implications for hotels and real estate?
• What action did the Slide Rule Association take at their national convention to address disruptive innovation in the form of handheld calculators?• They voted to take drastic action & created a leather pouch for slide rules as their competitive advantage.
• Mobile – Disrupts traditional websites• Now more minutes are spent searching the web on apps than browsers Google Android – 150,000 apps – 2 Billion downloads Apple – 425,000 apps – 15 Billion downloads• 1/2 of all searches will be via mobile devices within a year
Disruptive Innovation Uber app-town cars, taxi Assn tried to stop it, 10 seconds fordriver to accept, passenger rates driver & driver rates passenger, $10 fee if passenger is a no show
• Top 1, 2 or 3 sites according to Hitwise and ComScore in almost every market in the US except Houston• Ratings of agents o Over 70,000 agent reviews by consumers• Source for housing articles in Wall Street Journal and USA Today• Achieved $1 Billion market cap• 1/2 of agent leads may not be responded to• Zillow gives consumers what they want
Internet Information provider that we call “Desired Monopolies.”Well, your average realtor (we interviewed several as part of ourresearch for this report) doesn‟t quite “hate” Zillow, but therealtor-Zillow relationship is complicated. Realtors generallyadmire Zillow‟s web site and its ability to efficiently (and prettily)provide a wealth of real estate information. However, realtorsloath Zillow‟s price estimates, invariably describing them aswrong and bemoaning the friction they cause when prospectiveclients cite them, only to have the realtor "set them straight" withlocal knowledge Zillow never catches. But the biggest thing realtors hate about Zillow is that ... they don’t own it.
We can‟t resist Zillow‟s free, voyeuristic window into ourneighbors‟ homes, what they paid for them, and what they‟reworth now. Zillow‟s official business model calls for signing upmore subscribing real estate agents, facilitating more mortgageoriginations, and selling more of its highly targeted advertising.Overlaid graphically data on the classic Zillow aerialpresentation :Crime statisticsHealth statisticsImmunization rates at schoolsSewage treatment plants overlaid with arrows representing thepredominant wind directionIf Facebook charts our social graph, then Zillow clearly has thelead in charting our environmental graph. And as a DesiredMonopoly, Zillow can be the trusted middleman, aggregatingnice-to-have information into a must-have whole.
By only pursuing “sustaining innovations”that perpetuate what has historically helpedthem succeed, companies unwittingly openthe door to “disruptive innovations”.
Providing Consumers What They Want Sold Prices & Dates Listing History(Price Reductions) Days on Market Nearby Homes for Sale Nearby Homes Sold Price Estimates & Trends Contact a Buyer’s Agent Post Homes for Sale Compilation of Features from Above Websites
How many broker, franchise, or MLS sites are providingconsumers ANY of this type information? Look at the onlineperformance of these sites according to the WAV Group‟s WinReports powered by Experian Hitwise: The top five franchises combined amount to about 3.75% ofthe total real estate traffic. 70% of all consumer traffic does not include any visits to anagent or broker website. The first traditional broker website ranked on Hitwise comes inat 88th place. Although more than 775,000 agents belong to an MLS thatprovides an MLS public website for consumers, the total trafficgarnered by the top 80 MLS sites combined is less than 3.5% ofthe real estate traffic.