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It’s A Law. I Have To Use The UBER Metaphor To Explain How Commercial Real Estate Is F*CKED

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The go to perspective.

I think it is some kind of journalist law or something but if you want to help people understand what technology is doing to a specific industry you must use UBER as the example. Far be it from me to break the law 🙂 so hang with me. Here it goes.

We all have I assume at least an idea of what UBER is. Get a car to pick you up and take you somewhere.

Let me tell you about two separate experiences starting at La Guardia airport in New York.

Experience #1

I walk up the ramp after landing and look at my phone. I have plenty of time to get to my hotel and get ready for the meetings I have scheduled during the day. I walk towards the taxi pick up area pulling my carry on behind me. As I go thru the doors I see rows of people lining up at the taxi pick up zone five or six deep. A uniformed man with a whistle stands in the street waving his arms and motioning for the next yellow car to pull up. I wait in line patiently for fifteen to twenty minutes for the line to dissolve.It’s my turn and the man nods smiles and he asks” your destination?” I respond “the Hyatt Grand Central.” He nods and waves the next car up. He leans in the window and then pulls his head out reaching for the door handle. He smiles and as I look he has his other hand out for a tip. I reach in my wallet and pull out a five dollar bill he smiles and closes the door behind me. He puts my suitcase in the trunk and the cab driver again asks me my destination. He does not hear me and asks again as I lean forward. I speak much louder thru the plexiglass he nods looks to his left hitting the accelerator rocking me back into my seat. The car is a big yellow ford that looks as if has never been cleaned. The music is blaring up front. I’m not sure what it is. Even if I could understand the lyrics are drowned out by the honking and sounds of the street. I try to settle in. I know it’s a good half hour ride if not more depending on traffic. The driver picks up his phone and is talking loudly holding it out. Now he is screaming something. He pulls over two lanes at a time. I swerve back and forth as he swings back across two other lanes. He must be in a hurry. He is hauling ass. He picks up his ringing phone again this time cradling it in his neck as he searches for something to write on. The car swerves some more. Thru some sort of miracle we don’t hit anyone or anything and arrive at the Hyatt forty-five minutes later. I pull my card out to slide thru the machine. He turns and waves his hand at me. ” Not working. You have cash?” I do not have cash. He shakes his head and starts to dig around next to his seat. After a minute or two he  pulls out some sort metal plate that I recognise as a credit card whomper. He plays around with some paper and a few minutes later he gives me a receipt and pops the trunk. I pull my suitcase out close the trunk and he speeds off into the yellow traffic.

Experience #2

I walk up the ramp after landing and look at my phone. I touch the Uber button it asks me to select a point for pick up and the type of car I want. I select the area down from the taxi stand and the big black car. As I am walking to the exit the phone rings and it’s the driver. He has received my request and he says he will be there in less than five minutes. My phone also shows where his car is his picture and his name. As I go thru the doors I look to the left and see a black Lincoln Town Car pulling up. I raise my hand. The driver pulls up and gets out. He asks ” Mister Long?” I nod and reply. He reaches for my suitcase and puts it in the car. I head for the passenger side door and he reaches it first and opens it for me. I settle in and look for the phone charger. I notice a couple of bottles of water and some mints in the console next to me. Chocolate mints. Nice. The driver enters and confirms my destination verbally and reaches for his Sat/Nav button and we are off. The car is clean and smells fresh. It also has several business and sports magazines available to read. A little old school touch. The driver is wearing a crisp white shirt back tie and black pants. He turns to ask what I am doing in town. I respond in kind with some friendly small talk and we get into a debate about the state of the New York Nicks. The car arrives at the hotel and with a big smile the driver gets out and hands my suitcase to me. I know UBER has an automatic pay and tip system but I slip him some cash anyway. As I check in my phone prompts me to rate the driver and my email indicates I have already received a receipt from the ride.

Now you must be thinking ” Duke, two taxi rides are a metaphor for commercial real estate disruption ?”

Yes, let me explain.

If you look at both experiences they seem somewhat the same. I take a ride into New York in a car from the airport.

The first one is obvious in that it is the way it has been done forever. I’m sure you have all had that experience many times.

The second one however is different. Different in the way you need to see commercial real estate. NOW.

It’s that second experience they we need to focus on.

The first and most important part of this “experience” is that it is based entirely in a mobile environment. Uber has an app. Wait not just an app. It’s their entire business platform. It’s where the transaction starts functions in real-time in real life and then ends.

Let me say that again.

The transaction is created and completed in a mobile environment. Period.

But wait you say “Duke Duke come on we’ve been thru this already. Commercial real estate is different. It’s not a taxi ride. Come on I thought you were smarter than this.”

Let me reach into the residential side for just a minute to help your mind flow a bit.

Think about Zillow.com Trulia and Realtor.com

In their simplest form they have each created a PLATFORM for CONSUMER INTERACTION with REAL ESTATE.

Online mobile interactive real-time pictures video data finance due diligence consumer facing transactional real estate.

Commercial real estate does not have anything even close………NOT YET!

What they have also done is create real estate search engines that dominate the consumer lead industry.

Commercial real estate lead generation is still dominated by cold calling and relationship building.

They are all integrating data analytics and CRM into their “experience” which is creating a “value add” for agent/broker users.

This far exceeds any Data/CRM commercial real estate “experience” currently available TODAY!

There is a far more disruptive element to these platforms and that is their “value proposition” to the user.

A value proposition that UBER had figured out from day one.

Zillow Trulia and Realtor.com are well-funded and are already delivering a better consumer experience than traditional brokers.

They are also building tools for and relationships DIRECTLY with individual agents/brokers. The fancy name for that is concierge.

Ubers platform has created a model for independent drivers to create THEIR OWN business with and around Ubers tools.

Let that sink in for a minute. I will wait.

So let’s drill this down.

Uber is the easy to see go to business model for many companies.

Ubers valuation is what today? Hell, no reason to pay any attention to that idea. What’s 17 billion dollars really worth?

They have created a new marketplace.

Their entire business is based on a mobile transaction.

They created a new consumer experience.

Their tools enable users to create an entire business from their platform.

Zillow Trulia and Realtor.com are following right behind them. Zillow is only worth a few billion. Who’s counting?

So here we are. Commercial Real Estate 2014.

It’s staring us in the face.

Will there be a Uber for commercial real estate?

HELL YES!

What do we do?

– Let the data layer that will be created become the “online broker” we all don’t think we want?

– Redefine commercial real estate brokerage in a way that does not let the “online enviroment” compete.

– Completely embrace the  “online environment” and create new and innovative businesses?

– Understand that brokers/users of these “online environments” are the ones that will create the value.

 

Duke Long 2014

” Commercial Real Estate Brokers are NOT going away. They still provide a service and value the consumer/client needs.”

 

It’s A Law. I Have To Use The UBER Metaphor To Explain How Commercial Real Estate Is F*CKED.

 

 

 

photo credit: <a href=”http://www.flickr.com/photos/cevincat/522530159/”>28 Dreams</a> via <a href=”http://photopin.com”>photopin</a> <a href=”http://creativecommons.org/licenses/by-nc-nd/2.0/”>cc</a>

 

 

 

 

 

 

 

 

 

 

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  • Stephen Gammer, CCIM

    Your use of two unrelated experiences, hyperbole and poor language underscore your lack of insight into your own field. You’re not being a leader, just a voice in the wilderness thinking aloud with a catchy headline. Go back to work, visions for the future of CRE aren’t your strong suite.

    • Duke Long

      Stephen,
      Opinions and points of view are always appreciated. Post yours up twice a week for one year and let the world decide.

    • Chris
      • Duke Long

        Chris :):):):)

  • Developer123

    Are you familiar with Loopnet/Costar?? Pretty much identical to Zillow and other residential type services. Not sure where you’re going with this…..

    • Chase Pursley

      LoopStar Identical to Zillow? That-is-hilarious.

    • Matt Chapdelaine

      Seriously?

      I have just seen my first Loopnet/Costar troll.

    • Gabriel Gonzalez

      So there ARE Costar/Loopnet trolls floating around the internet! This is such an outlandish statement I don’t know what to say. I’m actually speechless……O_o

      • Duke Long

        Thx for having my back. You too Chase.

    • That’s cute. That’s like saying there’s no difference between my iPhone 5S and my parent’s rotary phone…

      Great article and excellent observation/comparison Duke!

  • Mark

    Loopnet/Co Star have been selling brokers back their own information for some time. Co Star wants to be THE platform for commercial real estate and like all monopolies tries to sue their competitors and/or buys them to remove the competition. Loopnet is trying the zillow model of showing preferred brokers in search results. Just like Google Ads, whoever will pay the most will get the most leads from these services. I think Dukes point is we need to create a better user experience if you want to beat out your competitors..brokers or otherwise.

    • Matt Chapdelaine

      Selling leads to brokers works in residential because listing agents are not used to double ending a transaction. Commercial is very different, any site that promotes a brokers listings under a competitors name can count the days until they’re abandoned by the CRE industry.

      • Mark

        I agree..not very creative thinking from Loopnet. But they are promoting it.

  • John Dough

    I think Duke is on to something here. Most of the innovations in the CRE industry favor brokers, appraisers and sophisticated owner/managers. Their “experience” with them and the novelty factor is only a slice of the broader market. And objectively speaking few have been highly disruptive. I think what Duke was saying is by expanding the ease and range of options afforded by online interaction is where users are heading. Without question Zillow’s “knowledge is power” approach has been liberating and widely accepted as such by their users. This fact then begs the question: Is there really any other way of effectively delivering such a value proposition than using online tools, particularly in a mobile sense? As for Duke’s willingness to present his ideas (especially in his own refreshingly unique style) on the future I say keep it up Duke. We need and appreciate your thoughts and observations.

  • Girish

    I agree with you Duke,we are also an commercial real estate agent having our site http://www.Search4space.com we have seen a huge dip in office space absorption in bangalore the rates have come down drastically.

  • Vicky Salizar

    Aside from some on-off “lucky” instances, the only end-users who would find their commercial broker off of a zillow-type of site are smaller tenants, tae-kwon-do shops, pot clubs, and other BS tenants.

    Signs, cold calling, and relationships are the way to go. There is a medium from which lead-gen can occur in CRE, but it’s not nearly as big, or fluid of a market as it is for residential. That is the fundamental problem.

  • Kevin Kowalski

    Costar/Loopnet just informed my firm that we will now be billed a 300% increase in same services costs. They obviously think that their services are indispensable, and they act as though they are a monopoly. From the responses Ive gotten from the local rep, and his manager, they could care less that weve been a customer for 10 years or If we cancel our service.

    Were now looking for CRE advertizing alternatives as our primary business is Investment Sales, we do need an outlet to get to the mass buyer community.
    If there are any new portals coming on line we would be interested to hear the brokerage communities experieces in phasing out Costar and Loopnet?

    • Kevin,
      42floors.com is a start. Work your way out from there.

  • Rachel Speal

    Duke, how much do you think the new crowdfunding platforms are having an impact on CRE?

    • HUGE!!! I need to dig deeper and pay more attention. Your Thoughts?

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