“Disruption vs. Innovation: What’s the Difference?” is discussed at RISMedia’s 2018 Real Estate CEO Exchange. (Credit: PlanOmatic)
“Disruptor.” Like a stubborn weed that slowly envelops a carefully manicured lawn, the term commonly carries an air of disdain and the negative connotation of a villainous start-up threatening the very fiber of real estate: brokerages and their agents.
Is there truly a difference between the terms “disruption” and “innovation”—the latter of which lends a wholeheartedly positive message of leading-edge strategies for advancing the industry? During “Disruption vs. Innovation: What’s the Difference?” at RISMedia’s 2018 Real Estate CEO Exchange, it wasn’t so easy to draw a line in the sand.
Four individual brokerage representatives, Eric Eckardt, U.S. CEO of Purplebricks; TG Gallaudet, senior director of Broker Relations at Zillow Group; Chelsea Goyer, vice president of Recruiting, Partners & MLS Relations at Redfin; and Scott Petronis, chief product and technology officer at eXp Realty, presented during the session, moderated by Joe Rand, chief creative officer of Better Homes and Gardens Real Estate Rand Realty, and RISMedia’s President and CEO John Featherston. Featherston asked, “Will disruptors sustain a downturn, and are they here for the long term?”
(L to R) TG Gallaudet, Senior Director, Broker Relations, Zillow Group; Eric Eckardt, U.S. CEO, Purplebricks; Scott Petronis, Chief Product & Technology Officer, eXp Realty; Chelsea Goyer, VP, Recruiting, Partners & MLS Relations, Redfin (Credit: PlanOmatic)
Among the panelists, there was consensus—they are currently in the limelight because they introduced business models that addressed modern challenges for which solutions were not readily available. According to the panelists, these solutions will withstand market changes and a shifting industry, and they strongly emphasized that, as innovators, they are here for the long haul.
Moderator John Featherston, CEO/President, RISMedia (Credit: PlanOmatic)
“We were born out of diversity,” said Petronis. “We came into existence because of the downturn. There was a whole lot of agents out there with nothing or less than nothing, and we created a value proposition that was so strong it would ensure that this didn’t happen to them again.”
Eckardt agreed, stating that Purplebricks is just another alternative in the marketplace, instead of the short-term disruptor title it has been given.
“As long as you are offering great value and great service, you can be successful,” said Eckardt. “We feel very confident and excited for the future, and are well-capitalized to continue to grow. We are cash flow positive, and don’t have those fixed operative expenses that other companies in the space compete with.”
The biggest challenges being addressed by these industry disruptors? Brand recognition and client satisfaction.
“Speed and convenience are drivers for consumers, especially in a down market, and if we can guarantee that level of service, we will thrive,” said Goyer. “We’ve done a poor job of establishing brands to consumers. No one can tell you the difference between brands.”
The solution to a fragmented industry in which brands are having difficulty standing out? For these companies, technology plays a significant role; however, it has also created higher consumer demand and a raised level of expectations.
“There are a lot of differences from just 10 years ago, and one is the phenomenon of the digital native,” said Petronis. “A huge portion of the population is digitally competent, and buyers and sellers have core expectations. There is such a reliance and heavy focus on tech.”
That’s why Zillow has zeroed in on near-immediate gratification for both consumers and agents, Gallaudet said.
“We started by being very data-centric and making it readily available to consumers; however, data is no longer enough—it’s a commodity,” said Gallaudet. “We have a problem in front of us, and when people push a button on Zillow to ask questions, we’re actively trying to solve that problem for agents and consumers. We’re focused on providing value and buy-side connections, as well as sell-side benefits with our Zillow Offers program.”
For others, discount commission models are the way of the future.
“Consumers are demanding great value and great service,” said Eckardt. “I’m not saying there’s no room for 5 or 6 percent commissions, but we’re seeing trends in the market toward lower commissions.”
While most of today’s disruptors are merely a twist on the traditional brokerage model, some companies do challenge the role of the real estate agent. One example discussed during the session was Opendoor. Petronis believes energy shouldn’t be expended on trying to eliminate these types of disruptors; brokerages should, instead, continue focusing on innovation.
“There’s a segment of the population that it’s going to be appealing to,” said Petronis, clarifying that these types of business models will not be appealing to the majority of the industry. “For those crunched on time, it’s very valuable. There’s room for a variety of models in the industry, and I don’t think that’s going away.”
Toward the end of the discussion, it became more difficult to separate the terms innovation and disruption. Attendees and panelists agreed that change is imminent, as the industry is continuously shifting, and in order to survive the shift, brokers must adapt and embrace the presence of today’s disruptive models, and welcome the opportunity to learn from each other.
And tomorrow? Today’s disruptors will be regarded as innovators, and a new set of disruptive business models will be introducing alternative ways to navigate the market.
“We are at an inflection point, and we are ready for certain types of change,” said Rand.
For continuing coverage of this year’s CEO Exchange sessions, stay tuned to RISMedia.com:
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