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A process by which a product or service takes root
initially in simple applications at the bottom of a market
and then relentlessly moves „up market‟, eventually
displacing established competitors.

An innovation that is disruptive allows a whole new
population of consumers access to a product or service.
$12 Billion    $16 Million




$93 Billion    $655 Million




$362 Billion         ?
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®
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Changing Consumer
           Expectations
• Everything on Demand – Xfinity, Pandora, Netflix,
  Amazon
• Privacy – Young People Don't 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,
  Angie's 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 Age
42% + Under 35 years of Age
50% of Home Buyers Are First Time Buyers
20% Under 40 & 40% Over 65
Disruptive Innovation - Bob Hale
54%
81% Will Benefit
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
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.
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
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 in
19,716 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
•   Social
•   Ratings & Reviews
•   Videos
• 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
Real Estate Apps - National Search
AppStore – Local App Search
Android Market – Local App Search
Apps for Consumers
& MLS Subscribers
800 Million Users

3 Billion videos are
viewed a day
200 Million Users
HAR Powers 800+
Agent’s Facebook
 Business Pages
with their Listings
HAR Tweets
Your Listings
87,000 Tweets
HAR Promotes
 Your Social
  Presence
140,000 Views - Agent/HAR Videos
88,000 Views - Listings Videos

       HAR Promotes Your
         Video Profile &
       Listings on YouTube
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
70,000 Ratings
3,556 Agents have Surveyed Clients 4.93/5.00
Total Surveys Sent to Clients 102,448 (49% Response)
“Who is the
real estate
agent with
the highest
ratings
near me?”
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Chicago Quarterly Market Ranking -
                    12 weeks ending 8/27/11
 Column1            Websites                  Visits

    1              Realtor.com                7.95%
    2           Yahoo! Real Estate            7.69%
    3                 Zillow                  5.89%
    4              Trulia.com                 5.35%
    5              Homes.com                  2.67%
    6               Rent.com                  2.62%
    7                Redfin                   2.18%
    8            AOL Real Estate              2.00%
    9      Midwest Real Estate Data LLC       1.78%
   10               ZipRealty                 1.72%
   11           Apartment Guide               1.68%
   12           Apartments.com                1.60%
   13       RE/MAX Northern Illinois          1.56%
   14            MSN Real Estate              1.48%
   15             MyNewPlace                  1.43%
Disruptive Innovation - Bob Hale
Houston Quarterly Market Ranking
              4 weeks ending 8/27/11
   Colum
                 Websites              Visits
     n1
     1           HAR.com               26.74%
     2       Yahoo! Real Estate        6.84%
     3          Trulia.com             4.10%
     4          Realtor.com            3.49%
     5             Zillow              3.15%
     6          Homes.com              2.69%
     7       Apartment Guide           1.90%
     8           Rent.com              1.87%
     9           ZipRealty             1.64%
    10       Apartments.com            1.54%
    11        MSN Real Estate          1.50%
    12           LoopNet               1.33%
    13     ApartmentRatings.com        1.32%
    14        AOL Real Estate          1.25%
    15         MyNewPlace              1.01%
Disruptive Innovation - Bob Hale
MLS Consumer Websites:
It’s Not Just HAR.com Anymore




           779,450 Agents Belongs to
            MLSs w/Public Websites
2010 – Broker/Agent Listings
 Viewed 145,881,434 Times
2010 – 438,782 Email Leads
    to Brokers/Agents
2010– Broker Phone# was Clicked
         419,222 times
2010– Click-Thrus from HAR.com to
     Broker/Agent Websites
         2,724,954 Times
$5.01




2010– Click-Thrus from HAR.com to
      Broker/Agent Websites
          2,724,954 Times
 $3.00 x 2,724,954 = $8.18 Million
Key Characteristic of an
Innovative Disruptor is Providing
  Consumers What They Want
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Not Listing Agent
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation - Bob Hale
Disruptive Innovation




  Uber app-town cars, taxi Assn tried to stop it, 10 seconds for
driver 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 our
research for this report) doesn‟t quite “hate” Zillow, but the
realtor-Zillow relationship is complicated. Realtors generally
admire Zillow‟s web site and its ability to efficiently (and prettily)
provide a wealth of real estate information. However, realtors
loath Zillow‟s price estimates, invariably describing them as
wrong and bemoaning the friction they cause when prospective
clients cite them, only to have the realtor "set them straight" with
local 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 our
neighbors‟ homes, what they paid for them, and what they‟re
worth now. Zillow‟s official business model calls for signing up
more subscribing real estate agents, facilitating more mortgage
originations, and selling more of its highly targeted advertising.

Overlaid graphically data on the classic Zillow aerial
presentation :

Crime statistics
Health statistics
Immunization rates at schools
Sewage treatment plants overlaid with arrows representing the
predominant wind direction

If Facebook charts our social graph, then Zillow clearly has the
lead in charting our environmental graph. And as a Desired
Monopoly, Zillow can be the trusted middleman, aggregating
nice-to-have information into a must-have whole.
By only pursuing “sustaining innovations”
that perpetuate what has historically helped
them succeed, companies unwittingly open
the door to “disruptive innovations”.
Disruptive Innovation - Bob Hale
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 providing
consumers ANY of this type information? Look at the online
performance of these sites according to the WAV Group‟s Win
Reports powered by Experian Hitwise:

 The top five franchises combined amount to about 3.75% of
the total real estate traffic.

 70% of all consumer traffic does not include any visits to an
agent or broker website.

 The first traditional broker website ranked on Hitwise comes in
at 88th place.

 Although more than 775,000 agents belong to an MLS that
provides an MLS public website for consumers, the total traffic
garnered by the top 80 MLS sites combined is less than 3.5% of
the real estate traffic.
Disruptive Innovation - Bob Hale

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Disruptive Innovation - Bob Hale

  • 1. A process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves „up market‟, eventually displacing established competitors. An innovation that is disruptive allows a whole new population of consumers access to a product or service.
  • 2. $12 Billion $16 Million $93 Billion $655 Million $362 Billion ?
  • 3. In 1965, AMA had 75% market share of all doctors, today 19% market share. Specialization Disrupts Generalization
  • 4. • ½ of MLS subscribers in Seattle are no longer REALTORS® • ½ of MLS subscribers in Atlanta are no longer REALTORS®
  • 7. Changing Consumer Expectations • Everything on Demand – Xfinity, Pandora, Netflix, Amazon • Privacy – Young People Don't 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, Angie's List, Zagat, Edmonds for car • Y Generation – no voice mail, no land lines, no email, watch TV but not on the TV
  • 8. 63% + Under 45 years of Age 42% + Under 35 years of Age
  • 9. 50% of Home Buyers Are First Time Buyers
  • 10. 20% Under 40 & 40% Over 65
  • 12. 54%
  • 16. Is Home Ownership being deferred to rental life styles?
  • 17. 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”?
  • 18. 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.
  • 26. 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?
  • 27. Rent nightly from real people in 19,716 cities in 196 countries. Airbnb.com – Air mattresses and donuts Listings worldwide from a room to a home Implications for hotels and real estate?
  • 28. • 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.
  • 29. Mobile • Social • Ratings & Reviews • Videos
  • 30. • 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
  • 31. Real Estate Apps - National Search
  • 32. AppStore – Local App Search
  • 33. Android Market – Local App Search
  • 34. Apps for Consumers & MLS Subscribers
  • 35. 800 Million Users 3 Billion videos are viewed a day 200 Million Users
  • 36. HAR Powers 800+ Agent’s Facebook Business Pages with their Listings
  • 38. HAR Promotes Your Social Presence
  • 39. 140,000 Views - Agent/HAR Videos 88,000 Views - Listings Videos HAR Promotes Your Video Profile & Listings on YouTube
  • 48. 3,556 Agents have Surveyed Clients 4.93/5.00 Total Surveys Sent to Clients 102,448 (49% Response)
  • 49. “Who is the real estate agent with the highest ratings near me?”
  • 52. Chicago Quarterly Market Ranking - 12 weeks ending 8/27/11 Column1 Websites Visits 1 Realtor.com 7.95% 2 Yahoo! Real Estate 7.69% 3 Zillow 5.89% 4 Trulia.com 5.35% 5 Homes.com 2.67% 6 Rent.com 2.62% 7 Redfin 2.18% 8 AOL Real Estate 2.00% 9 Midwest Real Estate Data LLC 1.78% 10 ZipRealty 1.72% 11 Apartment Guide 1.68% 12 Apartments.com 1.60% 13 RE/MAX Northern Illinois 1.56% 14 MSN Real Estate 1.48% 15 MyNewPlace 1.43%
  • 54. Houston Quarterly Market Ranking 4 weeks ending 8/27/11 Colum Websites Visits n1 1 HAR.com 26.74% 2 Yahoo! Real Estate 6.84% 3 Trulia.com 4.10% 4 Realtor.com 3.49% 5 Zillow 3.15% 6 Homes.com 2.69% 7 Apartment Guide 1.90% 8 Rent.com 1.87% 9 ZipRealty 1.64% 10 Apartments.com 1.54% 11 MSN Real Estate 1.50% 12 LoopNet 1.33% 13 ApartmentRatings.com 1.32% 14 AOL Real Estate 1.25% 15 MyNewPlace 1.01%
  • 56. MLS Consumer Websites: It’s Not Just HAR.com Anymore 779,450 Agents Belongs to MLSs w/Public Websites
  • 57. 2010 – Broker/Agent Listings Viewed 145,881,434 Times
  • 58. 2010 – 438,782 Email Leads to Brokers/Agents
  • 59. 2010– Broker Phone# was Clicked 419,222 times
  • 60. 2010– Click-Thrus from HAR.com to Broker/Agent Websites 2,724,954 Times
  • 61. $5.01 2010– Click-Thrus from HAR.com to Broker/Agent Websites 2,724,954 Times $3.00 x 2,724,954 = $8.18 Million
  • 62. Key Characteristic of an Innovative Disruptor is Providing Consumers What They Want
  • 82. Disruptive Innovation Uber app-town cars, taxi Assn tried to stop it, 10 seconds for driver to accept, passenger rates driver & driver rates passenger, $10 fee if passenger is a no show
  • 83. • 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
  • 84. Internet Information provider that we call “Desired Monopolies.” Well, your average realtor (we interviewed several as part of our research for this report) doesn‟t quite “hate” Zillow, but the realtor-Zillow relationship is complicated. Realtors generally admire Zillow‟s web site and its ability to efficiently (and prettily) provide a wealth of real estate information. However, realtors loath Zillow‟s price estimates, invariably describing them as wrong and bemoaning the friction they cause when prospective clients cite them, only to have the realtor "set them straight" with local knowledge Zillow never catches. But the biggest thing realtors hate about Zillow is that ... they don’t own it.
  • 85. We can‟t resist Zillow‟s free, voyeuristic window into our neighbors‟ homes, what they paid for them, and what they‟re worth now. Zillow‟s official business model calls for signing up more subscribing real estate agents, facilitating more mortgage originations, and selling more of its highly targeted advertising. Overlaid graphically data on the classic Zillow aerial presentation : Crime statistics Health statistics Immunization rates at schools Sewage treatment plants overlaid with arrows representing the predominant wind direction If Facebook charts our social graph, then Zillow clearly has the lead in charting our environmental graph. And as a Desired Monopoly, Zillow can be the trusted middleman, aggregating nice-to-have information into a must-have whole.
  • 86. By only pursuing “sustaining innovations” that perpetuate what has historically helped them succeed, companies unwittingly open the door to “disruptive innovations”.
  • 88. 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
  • 89. How many broker, franchise, or MLS sites are providing consumers ANY of this type information? Look at the online performance of these sites according to the WAV Group‟s Win Reports powered by Experian Hitwise: The top five franchises combined amount to about 3.75% of the total real estate traffic. 70% of all consumer traffic does not include any visits to an agent or broker website. The first traditional broker website ranked on Hitwise comes in at 88th place. Although more than 775,000 agents belong to an MLS that provides an MLS public website for consumers, the total traffic garnered by the top 80 MLS sites combined is less than 3.5% of the real estate traffic.