A Statement On Ukraine from Kevin Maggiacomo, SVN President and CEO

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Technology – Value Add or Brain Suck? by Kevin Maggiacomo

My new iPhone 4s arrived finally arrived this past weekend. My oldest son and I opened the package with much anticipation and we immediately dropped what we were doing to configure the device. Among the many new features made part of the 4s is Siri – the speech recognition device which, as Apple advertises, “Understands what you say, knows what you mean, and takes dictation.” So, gone are the days when I have to manually type a query into Google to search for a nearby Sushi restaurant, find directions, or, get this – type to text or email. From now on, all I have to do is talk. So, over the weekend I dictated and had Siri read aloud roughly 100 text messages sent and received. I quickly grew so accustomed to iPhone dictation that I became annoyed when I had to manually type an email on my Mac later that evening. On one hand, I felt more efficient, on the other hand I questioned if I was simply becoming lazy…

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Separately, as a CEO, I am constantly striving to predict the future and react to it in advance. Not only with respect to positional real estate strategies, but also in terms of adopting (and creating) new intellectual technologies – which extend mental capabilities and enable us to gain more information faster. So as a fan of applications in this category, I’ve researched and adopted as many CRE and non-CRE of these intellectual technologies as anyone. I use Dragan Dictation to dictate most of my laptop writing, regularly use Loopnet to create space surveys, view comps, and get a read on the market. SVN Advisors are LoopNet power users and many are subscribers to CoStar, including their CoStar Go iPad app, which allows you to take real estate data into the field, where you can even view detailed tenant information, including lease expiration dates without having to charm past building security or receptionists. And all of this has me thinking – are the convenience applications mentioned above changing the way I learn, eroding at certain skill sets, and making me less knowledgeable?

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While I can say with reasonable certainty that my IQ remains the same since becoming an early adopter, my ability to easily become immersed in the analysis of raw research data has eroded. In addition, my typing skills aren’t what they used to be and my spelling skills, thanks to auto-correct, have gone from good to average. For those of us in CRE (or any other field for that matter), what role have research products played in the reduction in the amount of market research that we retain? Posed another way, are the CRE practitioners of yesteryear, who had to physically walk building floors, drive every property in their area of focus, conduct live courthouse research, etc., more knowledgeable than we brokers of today?

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Are we becoming dependent upon these resources because we’re lazy, or because we need to in order to remain competitive? I’m not making a value judgment here, I’m just asking you to do a gut check – Do you use technology to advance your learning, or to fill a knowledge gap? The distinction between the two is subtle, yet important.

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The human brain is malleable. It is capable of being reshaped and while I don’t know the answer to the above questions, I do know that my mind now approaches learning a bit differently. My mind now expects to receive information the way that Loopnet feeds it to me – instantly, and with little effort. I have made it a personal challenge to add to my cognitive skills rather than replace them. This has required me to slow down in the short run at times, but in the long run I feel as if I’m expanding my knowledge base, not shrinking it.

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So, I ask – has our “encyclopedic knowledge” of CRE markets and beyond become artificial intelligence? Are Loopnet/Costar and the like making us stupid, or are we better off? I think the answer largely depends on approach and motivation. Thoughts?

Kevin Maggiacomo, CEO & President, Sperry Van Ness International Corporation

 

*All Sperry Van Ness® offices are independently owned and operated.

 

Technology Enabled Collaboration by Kevin Maggiacomo

The impact and the power associated with mobilizing people for a purpose are rooted in fundamental economics – they are nothing new. From electing a government official, to spreading word of and organizing an “Aquarian exhibition” of 500,000 people at Woodstock in 1969, ideating among a critical mass of people, sharing and sourcing information while leveraging the power of numbers and virality have always been present in society. Aligned crowds, we call them “smart mobs” today, are driving virtually every major trend in the global economy.

What’s new, and ever evolving, is the technology which is enabling crowds to be catalyzed, assimilated, and leveraged like never before. If we examine only the past five years, we see how rapidly the speed and power of group collaboration has increased to create value to stakeholders in ways that were previously thought unimaginable. “Technology enabled collaboration,” as its been dubbed, is in full force and effect in almost every industry on the planet. From Restaurants to Travel, and from Yelp to Orbitz, people and businesses are organizing, collaborating, sharing and peering for the purposes of lowering costs, improving quality, saving time, and even curing disease.

Another fundamental shift that has taken place over the last decade is the move from proprietary to transparent, from closed architecture to open source, from a world controlled by scarcity to one opened up by sharing. The power in business is no longer generated by those who control something, but by those who share it. I recall a friend of mine saying: “business has never been about addition or subtraction – it has always been about multiplication.” No greater multiplier exists than creating an impassioned, intentional movement based upon meeting a market driven need.

The following statement may seem counter-intuitive to many still clinging to their old-school ways, but businesses today need to understand they probably cannot control the marketplace by the uniqueness of a product or service, therefore their only choice is to empower the marketplace by adding value. Sage advice then, would be to not get sucked into the frivolity of attempting to control a market – be disruptive by opening it up.

Sustainability for businesses will be found in how quickly businesses can embrace sharing, not how long they can hold a market hostage. Few people will argue with the fact that business has, and will always be, about relationships. We can debate positional variances between qualitative, quantitative, and relational impact, but the market has ended one debate – you don’t control relationships you empower them.

Despite this movement, and hitting a bit closer to home, the commercial real estate industry seems to have been immune to the collaborative trend, and continues to operate much in the same way as it has for 20-30 years. When my firm (Sperry Van Ness) broke from the industry standard approach more than 25 years ago by adopting a set of core covenants, which gave birth to our ethos of compensated cooperation and participation with the entire brokerage community to market our inventory, we were looked at as heretics among our peers. I’m certain as time has evolved our “heretical” approach is now seen as having set the chinning bar for how the industry should operate.

The problem is that while the marketplace recognizes the benefit of the aforementioned model, the brokerage industry as a whole continues to operate with much of the same opacity, often times at the expense of the client and to the benefit of the brokerages. “Quietly” marketing properties, offering zero fee incentive for other brokers to help sell a listing, inserting eyeball roadblocks like overused registration and confidentiality requirements are still par for the course. Has any other industry been more immune to the advancements of technology enabled collaboration than commercial real estate?

When will our industry as a whole to come out of the shadows, cease with the ethereal and mercurial, embrace fundamental economic concepts like supply and demand and operate in the light of day? In the future, the market will simply not tolerate anything less than an authentic and transparent approach to business.

What say you?

Kevin Maggiacomo, CEO & President, Sperry Van Ness International Corporation

 

*All Sperry Van Ness® offices are independently owned and operated.

 

Freemium by Kevin Maggiacomo

How do you feel when you get something for free? Does the hair stand up on the back of your neck as if you’re being set-up for a bait-and-switch, or do you feel like you’ve received something of value at no cost for which you’re appreciative? If you’re anything like me, I’ve experienced both of the aforementioned scenarios. In my opinion there is definitely a right and a wrong approach to “Free.” In today’s post I’ll examine “Freemium” offers and how they might play a part in redefining the commercial real estate industry.

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The reality is that nowadays most of us are accustomed to receiving certain services (information and data) free of charge, and on the surface, with no strings attached and for nothing in return. Not a marketing gimmick like “Buy two get one free” (which is often the same as marking down a 2x marked-up product by 50% if you buy two), or the classic ad supported online newspaper and content model, but an increasingly important economic model whose genuinely free offerings are changing the ways in which consumers use (and purchase) products and services.

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Coined “Freemium,” by venture capitalist Fred Wilson (@FredWilson), the word is a portmanteau, which combines the words “Free,” and “Premium,” to describe a business model which follows one basic principle: Give a core product away for free to a critical mass of consumers, and sell a small percentage of them a premium product.

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Not Gillette, which practically gives their blades away for free, charging through the nose for their razors, or cell phone companies “giving” away the phone and charging for a data plan and two year commitment, but something, which, according to Peter Froberg (@PeterFroberg), a growth consultant with whom I work, “can be used in and of itself, without necessarily buying something else.” He likens the model to the fruit stand operator who offers free, sweet, sliced apples to entice his customers not to buy apples, “that’s fake free,” he says, but to buy pears instead.

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For most, the Freemium model best resonates when discussing Skype. To date, Sykpe’s free VoIP product has provided more than 1B downloads, and provided more than 16B call minutes of “Skype-to-Skype” calls. During that same time period, “Skype-Out” call minutes, Skype’s premium product, has accounted for only 2.2B of those minutes. A low percentage, of paying users, indeed, but enough to generate $21M in operating profit in 2010 (a big swing from their $352M growth related loss of 2009). Other emerging Freemium companies which feature ten’s of thousand’s of users include Evernote, Boardsuite, Linkedin, Pandora, Google (not exactly an “emerging” company), and more.

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Closer to my (industry) home, we find that LoopNet has been operating with a Freemium model for years – Free to post, free to search but with a paywall over Premium Search (access to newly listed properties), and Premium Lister access, which features more prominent portal placement and access to leads. Like them or not, the Freemium model has served them well…they are a profitable, $750M company recently acquired by CoStar.

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Hundreds of businesses, most of which are in technology or in the Web 2.0 space are utilizing Freemium models to generate profits – giving something away for free, and charging for another, often completely different product in the process. And in the course of my researching the Freemium space, it occurred to me that commercial and residential real estate brokers alike have for years been operating with a Freemium model.

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Peruse any national brokerage’s website, and you will find an abundance of free, well written subject matter, like market overview’s, reason’s to buy, reason’s to sell, and so on (at SVN, we just released our annual “Top Market’s To Watch” report). For some of the same reason’s I’m blogging, which include strengthening my personal brand, establishing credibility by demonstrating my ability to think critically, these companies work to create valuable content and strengthen their brands in the hopes that the reader will buy something else – their premium products.

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However, just as Freemium is emerging as a legitimate business model supported by empirical data, I’m hearing more about the brokerage best practice of charging for everything one does – no more free advice, abstracts, surveys and reports. So for those of us who are CRE practitioners, I ask you – Is the aforementioned “best practice” yet another example of the brokerage industry operating in the stone ages…a little slow on the uptake, or does the Freemium concept represent what leadership and strategy advisor Mike Myatt (@MikeMyatt) refers to as a “next practice” capable of creating a disruptive change in an industry prone to herd mentality? While I believe there to be truth in the old saying “free is a very good price,” I’d be interested your opinions – please do share.

Kevin Maggiacomo, CEO & President, Sperry Van Ness International Corporation

 

*All Sperry Van Ness® offices are independently owned and operated.