Earlier this week, Brad Inman relayed a story about a spat between Windermere and Compass. His analysis seems like the perfect lens through which to view the current state of the industry.
Robert Reffkin, CEO of Compass, told CNBC that his company has 5 percent market share in Seattle. OB Jacobi, president of Windermere, knows that the more realistic number is closer to 2 percent. Jacobi runs one of the best and most-respected companies in the Northwest. His brokerage (and many others) are frustrated that fast-and-loose statistics from the gilded upstart are getting the spotlight without scrutiny.
It’s not fair. It doesn’t matter.
I’m reminded of an old proverb, and you don’t have to be spiritual to see the value it might have in brokerage board rooms right now:
“God grant me the serenity to accept the things I cannot change; the courage to change the things I can; and the wisdom to know the difference.”
The compass points North. It’s a universal truth. Arguing that it actually points to a magnet 300 miles away from the North Pole is factually correct and irrelevant to the Caribbean cruise ship crew who just want to get to their destination. It’s a dangerous distraction from creating a strategy to avoid the multi-billion dollar ocean liner that’s coming full speed broadside.
I had a chance to sit down with Reffkin in Seattle last month, and I asked him what he’s paying recruits. “Whatever they’re getting now, plus more,” he said politely and without bravado. It’s about speed of consolidation, which is about money. He has a lot more of it. Two percent or 5 percent, his company will grow as long as it can spend this way.
This conundrum for traditional brokers and agents is about much more than Compass.
There are many new industry competitors wielding gargantuan borrowed war chests, quashing competitors and media objectivity with brute financial force. They operate on what many view as an uneven playing field. There’s nothing that a self-financed, profit-necessitating business can do to compete on those terms alone.
So what’s a broker or agent to do to compete?
Far be it from me to offer advice to my competitors — I’m encouraged by new entrants who shake up the status quo. But a pragmatic strategy for an agent competing in this environment would be similar to that of any business:
1. Accept what you cannot change
Money will continue to chase money into these models until the market and/or the economy prove them world-beaters or sinkholes. Media outlets will continue to amplify their proclamations and publicity pitches because they sell.
Those companies with the largest influx of investment will gain some market share via a combination of innovation and pure purchasing power.
2. Have the courage to change what you can
It’s a fight-or-flight moment. Those who choose the latter will flee to the comfort of past success, self-reverential confidence and willful ignorance of the impending changes coming.
The fighters will admit their weaknesses and be willing to make bold and sometimes painful changes: cut, gut and leave bureaucracy and inefficiency behind.
Identify and amplify unique strengths: partnerships, industry-leading practices, reputational equity, unique access to people or organizations, scale of human capital and network. Focus on enhancing what VC money can’t directly buy.
3. Seek out the wisdom to guide the path
Industry vets can tell you: booms beget new businesses, and busts wash many way. Some disruptions must simply be outlasted through a down cycle, while others survive and come out as dominant industry forces. Which are you facing?
A plan to make it through the next downturn is a start, but it’s not enough. Why will a consumer or agent choose to work with you this year, in five years or in 10 years?
Every business is susceptible to disruption and competition, no matter how big or innovative it seems today. Against a tidal wave, though, you’ve got to learn to surf, scuba or tie up with others to raft above it. Holding the ocean back alone only ends in a lonely trip to the bottom.
Sam DeBord is Managing Broker/VP of Strategic Growth for Coldwell Banker Danforth, Past President of Seattle King County Realtors, and 2018 Vice Chair of NAR’s Multiple Listing Issues and Policies Committee. You can find his team at SeattleHome.com and SeattleCondo.com.