disruptive innovation - bob hale

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Presentation on Disruptive Innovation by Bob Hale, President and CEO of the Houston Association of REALTORS.

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  • 1.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.

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. of MLS subscribers in Seattle are no longerREALTORS of MLS subscribers in Atlanta are no longerREALTORS 5. 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, howmany 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 6. 63% + Under 45 years of Age42% + Under 35 years of Age 7. 50% of Home Buyers Are First Time Buyers 8. 20% Under 40 & 40% Over 65 9. 54% 10. 81% Will Benefit 11. Is Home Ownership being deferred to rental life styles? 12. 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? 13. June 2011 Hitwise Report Rent.com Apartment Guide Apartments.com ApartmentRatings.com www.apartmentdata.com Apartment Home Living6 of the top 18 sites viewed by Houston Area consumers are related to rentals. 14. 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? 15. Rent nightly from real people in19,716 cities in 196 countries.Airbnb.com Air mattresses and donuts Listings worldwide from a room to a homeImplications for hotels and real estate? 16. What action did the Slide Rule Association take at theirnational convention to address disruptive innovation inthe form of handheld calculators? They voted to take drastic action & created a leatherpouch for slide rules as their competitive advantage. 17. Mobile Social Ratings & Reviews Videos 18. Mobile Disrupts traditional websites Now more minutes are spent searching the web on apps thanbrowsersGoogle Android 150,000 apps 2 Billion downloadsApple 425,000 apps 15 Billiondownloads 1/2 of all searches will be via mobile devices within a year 19. Real Estate Apps - National Search 20. AppStore Local App Search 21. Android Market Local App Search 22. Apps for Consumers& MLS Subscribers 23. 800 Million Users3 Billion videos areviewed a day200 Million Users 24. HAR Powers 800+Agents Facebook Business Pageswith their Listings 25. HAR TweetsYour Listings87,000 Tweets 26. HAR Promotes Your SocialPresence 27. 140,000 Views - Agent/HAR Videos88,000 Views - Listings Videos HAR Promotes Your Video Profile & Listings on YouTube 28. 70,000 Ratings 29. 3,556 Agents have Surveyed Clients 4.93/5.00Total Surveys Sent to Clients 102,448 (49% Response) 30. Who is thereal estateagent withthe highestratingsnear me? 31. Chicago Quarterly Market Ranking -12 weeks ending 8/27/11 Column1WebsitesVisits1Realtor.com7.95%2 Yahoo! Real Estate7.69%3 Zillow5.89%4Trulia.com 5.35%5Homes.com2.67%6 Rent.com2.62%7Redfin 2.18%8AOL Real Estate2.00%9Midwest Real Estate Data LLC 1.78% 10 ZipRealty 1.72% 11 Apartment Guide 1.68% 12 Apartments.com1.60% 13 RE/MAX Northern Illinois1.56% 14MSN Real Estate1.48% 15 MyNewPlace1.43% 32. Houston Quarterly Market Ranking4 weeks ending 8/27/11 Colum WebsitesVisits n1 1 HAR.com 26.74% 2 Yahoo! Real Estate6.84% 3Trulia.com 4.10% 4Realtor.com3.49% 5 Zillow3.15% 6Homes.com2.69% 7 Apartment Guide 1.90% 8 Rent.com1.87% 9 ZipRealty 1.64%10 Apartments.com1.54%11MSN Real Estate1.50%12 LoopNet 1.33%13 ApartmentRatings.com1.32%14AOL Real Estate1.25%15 MyNewPlace1.01% 33. MLS Consumer Websites:Its Not Just HAR.com Anymore 779,450 Agents Belongs toMLSs w/Public Websites 34. 2010 Broker/Agent Listings Viewed 145,881,434 Times 35. 2010 438,782 Email Leadsto Brokers/Agents 36. 2010 Broker Phone# was Clicked 419,222 times 37. 2010 Click-Thrus from HAR.com to Broker/Agent Websites 2,724,954 Times 38. $5.012010 Click-Thrus from HAR.com toBroker/Agent Websites2,724,954 Times $3.00 x 2,724,954 = $8.18 Million 39. Key Characteristic of anInnovative Disruptor is ProvidingConsumers What They Want 40. Not Listing Agent 41. Disruptive InnovationUber 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 42. Top 1, 2 or 3 sites according to Hitwise and ComScore in almostevery 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 43. Internet Information provider thatwe call Desired Monopolies.Well, your average realtor (we interviewed several as part of ourresearch for this report) doesnt quite hate Zillow, but therealtor-Zillow relationship is complicated. Realtors generallyadmire Zillows web site and its ability to efficiently (and prettily)provide a wealth of real estate information. However, realtorsloath Zillows 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 dont own it. 44. We cant resist Zillows free, voyeuristic window into ourneighbors homes, what they paid for them, and what theyreworth now. Zillows 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. 45. By only pursuing sustaining innovationsthat perpetuate what has historically helpedthem succeed, companies unwittingly openthe door to disruptive innovations. 46. Providing Consumers What They WantSold Prices & DatesListing History(Price Reductions)Days on MarketNearby Homes for SaleNearby Homes SoldPrice Estimates & Trends Contact a Buyers Agent Post Homes for SaleCompilation of Features from Above Websites 47. 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 Groups 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.