Beginning Thursday, Redfin Will Not Display Zillow Listings

Redfin received notice late last Friday that on Thursday, February 9, Zillow will no longer be sending us for-sale-by-owner listings and other manually posted listings that we can display on our site.

Zillow primarily gets listings directly from individual brokers, not from the Multiple Listing Services (MLSs) that all brokers use to share listings with one another, so Zillow is governed by different restrictions than we are. This means that we will continue to display for-sale-by-owner listings from other sources, wherever it’s allowed by the local MLS to which we belong.

We aren’t crazy about the decision, but presumably neither is Zillow: Zillow’s listings got 35,000 views on our site alone in January, and many of the people who viewed them ended up on Zillow’s website too. We’ll continue to show Zillow’s Zestimates, mortgage data and any other information from Zillow we can get that would be useful to our customers. The Zestimates drive lots more traffic from Redfin to Zillow than the for-sale-by-owner listings.

More Crow, Please

Well, now I feel silly. Earlier this evening, I wrote a blog post about the boycott against the pro-SOPA crowd; SOPA is the bill to stop piracy on the Internet. I said that the boycott was a form of censorship when in fact a boycott is an exercise in free speech. I was 100% wrong, moreso because I’ve argued in favor of mass movements before.

The commenters on my post, namely Mary Hinge, Chris Dixon and Sasha Aickin, are 100% right.

Why did I say something wrong? Well the whole boycott just reminded me of my days in college, when I saw very strident people make it very difficult for someone to express an opposing view. Even though I was sort of a wanna-be hippie myself, I always empathized with the guy being shouted down by the other hippies.

The issue back then was political correctness. Yes, I am one of those people who believe that the words we use to describe people of different races and sexual orientation matter, but still I’ve never been comfy with the idea of political correctness. The pressure back then somehow felt to me like a violation of free speech, when really the pressure itself was a part of free speech.

And now it sometimes feels to me that we are using far more powerful levers, on Facebook and Twitter, to shout down the pro-SOPA people. It is totally legit, especially since they have pretty big levers too. I still think we’ll regret that we didn’t engage in a more civil way. Something should be done about piracy. No one who built the Internet seems to have serious intentions of doing it. Any action the government takes will be despised.

But businesses and financiers have the right to organize together to crush a bill, just as today’s Internet companies and venture firms are now doing, alongside the studios and producers on the other side.

I apologize for being stupid, but I wasn’t trying to be provocative. I was sincere in my stupidity, if that makes any sense. I have posted many, many times about Internet piracy because it bothers me more than most people, and posted even more often arguing for moderation generally, because I’ve lately been feeling like the whole world has gone mad.

But I was still wrong about whether the boycott was a violation or a shining example of free speech. It’s a shining example. If you have ever gotten into an argument in which you hoped your unassailable logic would slay the will to live of the other side, please print this blog post out. My will to live has been slain for the moment, and I can’t delete it so I just have to eat it.

SOPA Witch-Hunters, Count Me Out

UPDATE: I was wrong in this post in saying that a boycott stifles free speech. A boycott is a form of free speech. I retracted that argument in a subsequent post a few hours later. *sigh*

The opposition to the Stop Online Piracy Act (SOPA), the bill before Congress to punish websites that publish pirated songs, movies and essays, has united behind the theme of free speech.

But now in a turn worthy of the pigs in Animal Farm, Paul Graham, Chris Dixon, Fred Wilson and others are organizing a campaign to intimidate and silence those who support the bill, retaliating against law firms, journalists and investors alike.

Who knows who was the first to sharpen a stick at both ends, but many were clearly eager to join the fray. Joyce Kim encouraged entrepreneurs to fire lawyers who support SOPA. Chris Dixon wondered aloud if journalists from pro-SOPA newspapers should be excluded from press events (update: Chris in the comments has made clear that he wasn’t saying he was in favor of excluding journalists from anything). Paul Graham just joined the mob, immediately agreeing to block pro-SOPA investors from getting access to the startups he advises.

To which I can only say: please add me to the black-list. Not because I support the bill. As I’ve written before, it is flawed in exactly the way most democratic legislation is: it’s a dog’s breakfast of competing interests, force-fed to the innocent and guilty alike.

I just don’t like bullies. Especially hypocritical bullies. If you actually believe in free speech, and not simply the free distribution of other people’s intellectual property, you should let journalists, law firms and investors exercise their rights to it alongside your own. And yes, working on a bill in an open, democratic process is a valid expression of speech.

Instead, we are threatening anyone who disagrees with us. Like all ideologues, we have convinced ourselves that the other side is a wealthy special interest as if we are not very wealthy, very special and very interested. We imagine that we are trying to protect the Internet only for noble purposes, but it’s also true that we stand to make billions of dollars from the Internet staying just the way it is.

And like all violent ideologues, we have convinced ourselves that the issue is so pressing it demands extreme action. The stakes in this case are usually described as “breaking the Internet,” when in fact it’s already broken: not for the folks profiting today from the Internet, but for all the folks who create the beautiful books, articles, movies and music that the Internet is so often used to steal.

What we need is a discussion about how to make the Internet work for artists, software companies and regular folks alike. No one in software seems interested in that conversation: more than a month ago, we asked everyone opposed to the bill to suggest a better way to prevent piracy, and still no one has.

Now, we have taken this a step further. Not only are we refusing to engage in a constructive way, we are threatening anyone who engages in a way that is disagreeable to us. When no conversation is possible and no action from us is forthcoming, we can hardly blame the Luddites, bureaucrats, idiots and meddlers for being ill-informed or hasty.

Over the holidays especially, we need to stand down from the crazed ideological stances and self-interested politics that are ruining this country, and work together with people we don’t always like to figure out how the Internet — and everything else — can be made better, not worse.

The Market Spends Another Day In Its Bathrobe, But Feeling Better

Howdy Redfinnians!

Time for Redfin’s monthly tell-you-everything analysis of the real estate market! We just hit $5 billion in home sales, where Redfin’s agents represented either the buyer or the seller, all in our don’t-crowd-me-baby style. For every customer, deal or no deal, Redfin surveyed the customer and published the answer.

And on every home, we’ve paid our agents a bonus based on the survey result, not just a commission. Ninety-seven percent of our customers would recommend us to a friend. We’re so proud! Break out the Dom and the Dixie cups!

The Market Spends Another Day In Its Bathrobe, But Feeling Better

But enough bragging. How’s the market? It’s been sick so long no one has noticed it’s getting better. But it is! Sure September prices slipped, driven by the animal spirits of economic malaise. But consider:

• In May, economists predicted 2011 prices would fall another 7% – 9%. Redfin said prices would in fact stabilize. Since May, prices have actually increased 3%.
• For the whole year, prices are flat
• However weakly, sales are increasing
• The number of homes for sale is falling
• The number of foreclosures is falling

We don’t expect a miraculous recovery: prices will be low for years, and will probably weaken slightly in the remaining months of 2011. But being a little sick isn’t so bad. You watch TV. You fry an egg for lunch. You haven’t yet forgotten how terrible it was before, when you spent all night in the bathroom.

Welcome to residential real estate in late 2011. Let’s dig into the numbers shall we?

Prices Dip

September prices dipped .6%. On the bursting-bubble’s five-year birthday, Las Vegas homes prices now sit 60% off their peak.

What difference does the overall economy make? Well consider Dallas, where prices have fallen only 8%: $4-gas has been good to Texas.

For now, we seem to have arrived at the rocky bottom with a downward trend that Karl Case predicted in February:

In the East and Midwest, there may not even be a downward trend.

But the damage has been done. Adjusting for inflation, all appreciation in the ’00′s is gone.

The renters sure are laughing now! But perhaps they’re also finally getting ready to move. Rental vacancy rates just fell to their lowest level since 2006, and rents seem likely to keep rising, by 3% in 2012. The ratio of home prices to rents is at a five-year low, though still roughly 15% higher than historical averages.

One sign renters are buying: the proportion of Redfin customers who are first-time home-buyers has increased 18% in three months.

Home Sales Increase

What’s ahead? As we predicted last month, pending home sales in October increased 10.4% since September. Closed sales also increased. The increase was viewed with only meek enthusiasm by economists, since it was a rebound not a surge.

But we expect pending home sales in November to keep rising. The number of Redfin customers signing offers increased for three consecutive weeks in November before Thanksgiving. The November 30 Federal Reserve Beige Book reports that U.S. real estate activity increased, though not everywhere and not by much.

Not a clean bill of health by any means, but some improvement.

Inventory is Low

The reason Redfin’s been saying all year that prices don’t have far to drop was that there aren’t many homes for sale. A lot of homeowners owe too much on their mortgage to sell, and a lot more just don’t want to sell right now. Would you, if you didn’t have to?

Since the late 2007 peak, the number of homes for sale has declined 60%, a trend that continued this month. The laws of supply and demand are starting to do their work.

A Trickle, Not a Tidal Wave, of Foreclosures

What about the scary stuff, all the foreclosures that banks haven’t even tried to sell yet, and all the past-due mortgages that should have been foreclosed months ago? We worry about that too.

We just hired an asset manager from a big bank, who just told the whole company how many repossessed homes the banks are waiting to list. It was like the vast evil egg farm Sigourney Weaver discovered in Aliens.

When are these little devils going to hatch?

Well, the rate of new foreclosures has been low for a year, a trend that continued in October. The number of homeowners who owed more than their home was worth has been dropping since 2009 and continued to drop in October. At this point, 27% of Americans are still either underwater or nearly so.

This tells us that for years there will be a steady stream – not a tidal wave — of distressed properties hitting the market, accounting for about 1 in 5 listings nationwide. Price can’t go up by much until this stuff runs out.

But it really helps that banks have become eager to approve short sales – where the bank lets the owner sell the property for less than the mortgage — in lieu of a foreclosure.

Rates Dip Below 4%

And the fact that many 2006 loans have an expiring 5-year teaser rate probably will make a difference: the new rate is actually lower than the teaser, and many folks’ mortgage payments just fell.

So now we arrive at the real reason the market has been improving: mortgage rates have been at historic lows, once again dipping below 4%.

I once said these rates can’t last, and everyone said I sounded like a used-car salesman, and that I was wrong. That was a year ago. I was wrong! But hey, so was half the government! These rates can’t last forever — but they’ll probably last a while yet. The Fed is committed to keeping them low for years.

Thanks for your support!

Best, Glenn

Just Write a Better Bill

Fred Wilson, Brad Feld, Reid Hoffman, Evan Williams and Dennis Crowley are launching a campaign this Wednesday to stop the Protect IP bill recently introduced in the Senate. They’re some of the smartest people thinking about the Internet today. But sometimes I think they’re part of the problem, not the solution.

The bill would make it illegal for Google, Bing or possibly even Facebook and Twitter to host links to websites like PirateBay that have “no significant use beyond copyright infringement.” And the bill would remove these pirate websites from Domain Name System (DNS) servers, so you couldn’t visit the sites directly without knowing their numeric Internet Protocol (IP) address.

The purpose of the bill is to make it more difficult to download music, movies and other intellectual property without paying for it. The opposition has decided this is censorship, and is launching a “Stop Censorship” campaign on “Stop Censorship Day,” which is tomorrow.

To be clear, I don’t like the bill either. The Electronic Frontier Foundation has outlined some of the main issues: it could limit innovation around content-sharing and social sites, which would  have to develop ways to identify stolen content. It doesn’t protect companies that make reasonable efforts to remove stolen content. It needs to ensure a due process for removing a website from DNS servers, which otherwise sets a dangerous precedent.

But this bill, however flawed, isn’t censorship. Censorship is when governments or corporations prevent someone from expressing her own ideas. Theft is when someone takes someone else’s work. Copyright laws exist to prevent theft of someone else’s work. If a thief stole my bicycle, or even copied Redfin’s website wholesale, and then claimed her act as a protected form of self-expression, I would punch him in the nose. With or without this bill, you can say whatever you want on a website as long as you don’t play someone else’s song or movie without permission.

Reid and Fred understand the difference between free expression of your own ideas and theft of someone else’s ideas, and they’re intelligent enough to think about more constructive ways than the current bill to stop musicians, writers and movie-makers from getting ripped off. I wish that was their focus. But protecting artists hasn’t been their primary concern, or really the concern of  anyone involved with creating the Internet.

Every since I downloaded the Anarchists’ Cookbook from an online bulletin board at the age of 11, the Internet has had a culture of theft. The difference is that now our most respected thinkers have given the grown-ups among us permission to steal. Friends of mine who would never take a Star Wars DVD from Target routinely download movies without paying, and they cite people like Mike Arrington for his approval.

Fred Wilson, to his credit, has invested in Kickstarter, which helps artists get funded through old-fashioned patronage. In return for providing a few hundred dollars, you can get early access to a new song or be acknowledged in the first edition of a new book.

This is a wonderful concept, but it isn’t going to give artists access to large-scale commercial markets so that they can thrive on their own. Anyone who has studied medieval patronage knows how twisted and kow-towing the patronage system can be. It gave us great churches, but also the image on the Sistine Chapel of Michelangelo’s soul being hung out to dry.

Michael Arrington has suggested that musicians tour endlessly, selling t-shirts at their shows. Endless touring is what killed the money-desperate Charles Dickens, who never forgave America for refusing to enact copyright laws in the years when most English writers lived in England. It was decided at the time that the printing-press business was more important to America than the novel-writing business. As now, the rationale was jobs rather than justice.

I don’t really care whether the Internet industry is more important to the American economy than the movie or music business. I care about what’s fair. As capitalists, our goal should be to create a fair market, which lets artists prosper from selling their work; this is what Apple and Amazon are doing. And as creators ourselves, our sympathies should be with the artists. We can support freedom of expression and stop theft but only if we try to solve this problem in a thoughtful, urgent way.

Otherwise, we’re just like the industrialists criticizing indiscriminate government action on pollution when we ourselves have refused to engage, all the while profiting from each year’s delay. Do you think the government has any idea how efficient a coal plant or an automobile can be? Neither does it understand how the Internet works. It’s impossible to make an industrial product without harming the environment, and it’s impossible to make a social or search website without creating the possibility of online theft. But together we can make things better than they are now.

We just have to try. I hope when folks post their protest on Wednesday that we also propose a way to protect intellectual property as well as innovation and genuine self-expression at the same time. Otherwise, it’s hard to blame the government, after years of standing aside, for acting in less informed, thoughtful ways.

When Rabid Squirrels Attack

Redfin just raised $14.8 million, in a round led by Globespan Capital. The press release rattles off the stunning accomplishments that brought us to this pass: $6 billion in Redfin transactions, $85 million in savings to consumers, 97% customer satisfaction.

Michael Arrington broke the news, in a blog post with a photo of Redfin as a rabid squirrel. Which he intended as a compliment. It is a fact that his interview focused on the question, “Have you ever participated in an orgy?”

“Is this,” I asked breathlessly, “off the record?”

But the real question is: what’s the story behind the fundraising? Why did we raise more capital? Why Globespan?

Initially I didn’t want to do it. I once heard that Gene Simmons burst into an MTV playlist-meeting wearing roller skates and kneepads, asking what it would take to persuade bored executives to air a Kiss video. And this is how I’ve always thought about the fund-raising process too.

But fundraising isn’t such a riddle to us anymore because our business isn’t such a riddle anymore, to investors or to ourselves. We’re able to explain how it makes money now, and how it can make more money later. And so we told Globespan all about it, at first in an informal 2010 meeting with a managing director, Venky Ganesan.

It was then that Venky told us all about his firm’s experience with a progressive, local company we loved, Zipcar. And so we kept in touch.

Like many of us, Venky had started his own software company during the ‘90’s boom and somehow made it work through the bust. When pursuing Redfin, he used a term from a Cameron Crowe movie, “humble daily siege,” which I’ve since used on a lot of candidates Redfin is recruiting. He had a brilliant due diligence process, which relied heavily on contacting customers who’d left us Yelp reviews, good and bad. We like him a lot, and we’re glad he’s joining our Board.

Why did we raise more money? We didn’t need to, not desperately anyway. As of now, we’ve only spent a few hundred thousand of the $10 million we’d raised from Greylock in 2009. But in between, we dipped into the $10 million quite a bit because we’re a seasonal business, losing millions in winter and making millions in summer.

We emerge from our caves every spring a gaunt, scared little bear, so we decided it makes sense to put more huckleberries in the bank. And before our last round with Greylock, when we ran the business with only a few hundred thousand in the bank, we got really tight about every little risk. Like someone emerging from a crazy relationship, we hadn’t even noticed we’d gotten that way until we weren’t anymore.

We don’t want to get tight again. A company with less than 1% share of a $60 billion market can’t stop taking risks. As we’ve learned from Amazon, you have to keep making big bets, which can be capital-intensive when you’re in an operationally intensive business running at a larger scale. Our goal is thus to be as cheap as possible, even when that isn’t actually cheap.

We’ll use the money to keep expanding geographically, to offer buyers and sellers services we’ve never offered before, and to go deeper in R&D. Strap in Redfin! It’s going to be a wild ride.

Requiem for a Dream

Redfin just took down Scouting Report 1.0 for good. Our latest problem was that the data we used for Scouting Report had problems at the source that weren’t easy for us to fix, mostly because agents work informally in teams, or sometimes don’t formally record when an out-of-town agent represented a buyer in a deal.

So we took Scouting Report down. The post I was going to write about this decision apologized a lot. I’m sorry we didn’t get the data right; it was arrogance to think that we had. I’m sorry we showed up in the Google index, too, and wish we hadn’t run any Redfin ads on another agent’s page, though these problems would have been easy to fix.

But I still think the folks most violently opposed to Scouting Report didn’t hate it because it was wrong but because it was right. I know that consumers loved it and now they can’t get it anywhere else. And I still believe that brokers should be the ones to tell regular folks how agents have performed in different neighborhoods, because we’re the only ones with reliable data.

As for the rest of the story, you can read all about it in the note I sent the company. Thanks to everyone who supported us or reasoned with us for your time & kindness.

Hi Redfinnians,
 
As you may have heard, Redfin just pulled the Scouting Report we released last Thursday to allow consumers to see the deal history and performance metrics of any real estate agent. The basic problem is that the data wasn’t accurate, first because of bugs then ultimately because of problems with the source data in MLSs.

Only a tiny fraction of transactions weren’t accounted for but it would have been enough to destroy our credibility if we had insisted on keeping Scouting Report live.  Had the data been accurate we’d have defended ourselves from MLS and agent complaints ’til hell froze over, but in the absence of accuracy we have no defense.
 
I don’t know when Scouting Report will see the light of day again, though I am hopeful that if we allow any agent to curate her own profile, we will resolve many of the inaccuracies. In the meantime, we’ll use some of the data to tell consumers when a Redfin agent has worked with another agent before.

Some of our competitors will dance on Scouting Report’s grave and say I told you so. I certainly feel frustrated that I wasn’t more thoughtful in launching the service; a beta program involving our partners would have avoided all sorts of problems.
 
We have to account for what happened over the past week as a failure, and try to understand how we can do better. Obviously, it’s my fault. I’ve thought a lot about how hard folks worked to pull this off. I wish you’d had a better leader in me. But the lesson we should draw is to be more thoughtful about making a risk pay, not more cautious in avoiding the risk altogether.
 
There are all sorts of projects that fail at any corporation for a different and less conspicuous reason, because the risk was measured out in teaspoons and the idea was compromised beyond recognition and nobody made decisions and the thing had absolutely no personality and nobody really cared in the end whether it was good or bad — or even knew that it existed. The reason most people give up on a great company like Redfin is because it stops making decisions and stops taking risks. They give up because the company loses its gonads and its heart and then its soul.
 
To which I say nuts. That wasn’t the problem here, and The Great Pumpkin willing it never will be. One of our values is to be fearless: bet big, tinker constantly, fail fast, measure results. If you see people who worked on Scouting Report don’t BS ‘em and say the first release was a triumph — man oh man it wasn’t — but maybe thank them for their fearlessness all the same. In the end it’s that spirit that makes me sure we’ll win.
 
Love, Glenn

Get the Goods on 1 Million Agents (September Roundup)

Big news Redfinnians!

Now you can use the brand-new Redfin Scouting Report to look up stats on any agent — where he sold homes, how quickly, at what prices, with how many price reductions — all on a map, with pictures of every sale. It doesn’t work in Seattle and DC though.

The gerbils we tried it out on absolutely demolished their cages after we took it away. On the New York Times and across the big blogs we’ve been getting rave reviews, with one editor commenting that this is “the most disruptive real estate play in years.”

Meanwhile, Redfin’s own real estate agents now handle short sales, and our new Android app is already the top-rated real estate search tool on the Android Market. The iPad app is coming this winter, but what we really need are a few more San Francisco software engineers to get the job done; just write me back to apply.

Prices Up, But It’s Just a Seasonal Thing

Now let’s talk about what’s going on with U.S. real estate: home prices ticked up from the summer-time rush, interest rates are dipping below 4%, inventory is down, foreclosures are on the rise again, and demand is still weak but getting stronger.

The numbers for July just came out this week, and prices rose for the fourth straight month, which tends to happen during the summer:

Even when you say, “OK, that was just the summer,” and wipe out the gains, it’s still a big deal that prices haven’t fallen since April, especially since most pundits predicted another 8% drop from April – December 2011.

One reason stable prices are a big deal to me is that this is exactly what we said would happen in April. And the other reason is that when prices stabilize, buyers can start coming out in greater numbers, with more confidence.

The hitch is that many sellers will still hold off until prices actually rise; we all think our house should be worth more than it really is right now. This is the main reason why the number of home sales has been down, near the lows it reached last summer when the federal tax credit expired.

Demand Among Buyers Up Right Now, Listings Way Off

Hungry buyers and fewer listings are exactly what we’re seeing in our own business. Demand among buyers using Redfin agents increased fairly sharply over the past three weeks. This was unexpected since sales usually dip a bit in the fall, and the stock market has been a Rocky Horror Picture Show.

Last week, customers requesting tours was up 5% from the four-week average, and customers writing offers was up 7%. Demand in Seattle was weak but not anywhere else, and Southern California and Boston were really strong.

When we ask people “why now, when the summer’s over?” we hear about low interest rates, higher rents and “I couldn’t wait forever.” New Redfin listings on the other hand were down a whopping 64%. Many of the in-home listing consultations recently hosted by Redfin agents end with the owner deciding to wait until next spring.

So Why Is Inventory So Low?

The reason Redfin has been so confident about stable home prices is that the inventory nationwide is dropping. The number of homes for sale has declined 17% since last year. Shadow inventory, which represents the scary backlog of distressed properties that haven’t yet reached the market, has actually declined 16% year over year.

It isn’t hard to imagine why inventory is so low. Regular home-sellers are waiting for better days unless they absolutely have to sell. And banks that used to flood the market with foreclosures have been slowly withdrawing from the market, for now.

What worries us is that default notices – which the bank sends you when you don’t pay your mortgage for three months – spiked 33% in August. But foreclosure auctions are still near three-year lows. When we look at individual court records, we see the banks threatening to kick people out but never following through.

Maybe the banks just got tired of re-possessing and then selling properties. Maybe they realized getting the owner to sell the place for a loss is still a better outcome than a foreclosure that puts the bank on the hook for a sale. Maybe they had more poetic qualms. Or maybe they’re just gearing up for more foreclosures next year. We don’t know. Our best guess is that they’ve lost their appetite for destruction.

Interest Rates Dip Below 4%

But they certainly haven’t lost their appetite for lending money, at least not when the government is guaranteeing about 95% of all loans. Rates have been dropping like a rock, occasionally dipping below 4%:

Since most people have to buy the money for a home before they buy the home itself, the drop in interest rates has had more of an effect this year on what it really costs to own a place than any change in prices.

And that’s the news from Redfin! If you have any comments just write back and I’ll forward your question to a Redfin agent — if I can’t answer it myself. Happy October and thanks for all your Redfin support!

Best, Glenn

More Gadgets, Please

On hearing this week that Barnes & Noble stock traded up on 140% growth for its e-book reader, the Nook, I had only one thought: more gadgets, please.

If a book retailer can develop a device that sells like hotcakes, the entrepreneurs in Silicon Valley and Seattle surely can too. The fact that Barnes & Noble has succeeded where many in the Valley have never even tried is like getting dunked on at the playground by your 54-year-old uncle.

It’s hard to believe that during the Steve Jobs interregnum, when Silicon Valley first turned away from actual silicon to fund dot-com sensations like Netscape, Amazon and Google, we barely noticed that a former 19th- century Finnish pulp mill was dominating the market for mobile phones.

The only new company to challenge Nokia’s hegemony was Canada’s Research in Motion, which was so far from the world of Silicon Valley that it may as well have delivered its BlackBerries by dogsled. The devices came to be known as CrackBerries for their owners’ slavish devotion, yet no one here thought of developing an alternative until Apple’s iPhone.

Even now, consumers’ appetite for more gadgets is insatiable. Sure, the Kindle looks like it was stolen from a 1964 Epcot Center exhibition. And we all thought its competition with the iPad should have ended like an Aeschylus play, foreordained and tragic. But two years on, both are still on my nightstand. The Kindle’s sales have out-stripped Amazon’s wildest expectations.

So why aren’t there are any gadget startups? For all the tributes to Steve Jobs from online entrepreneurs, you’d think more of them would embrace his signal approach to technology, dominating a market by making both hardware and software. But there has hardly been an explosion of device-driven startups.

In fact, I can think of just one. It is Square, which makes the gizmo shop-keepers attach to their iPhones for running credit cards. Half the reason Square is so exciting is that you can hold its little swiper in your hand. Has any company ever reached a $1-billion valuation faster?

The reason that entrepreneurs don’t follow Square’s lead is mostly because so many are coding on a couch, not soldering stuff in the garage. In an era when anyone can learn PHP in a six-week self-taught course, this trend will continue.

Eventually, we may completely forget how to make hardware. In out-sourcing manufacturing to China and elsewhere, we not only forsake all the working-class jobs that come with making millions of gadgets, but also the industrial craftsmanship to make the first one.

As Redfin has learned about real estate, innovation is occasionally a bolt from the blue but is more often the sum of a thousand little improvements gathered from doing something firsthand, over and over again. Aristotle would say that we are what we repeatedly do, but it’s also true that our art is what we repeatedly do.

To build a better mousetrap, we need engineers to roam the factory floor, thinking about how to make hardware better. That Amazon’s hardware design efforts are based in Seattle gives us a chance to get in this game, building new skills and spinning off new startups.

It also speaks to our earliest impulses as entrepreneurs. Growing up, my favorite restaurant was Wendy’s, which used to line its tables with old-fashioned newspaper ads touting bizarre contraptions that picked your nose or clipped your toenails, sometimes all at once. Munching my burger, I wondered why the world stopped trying to make these wonderful devices. I still do.

Get Back in the Game

Everything I’ve read about the American economy argues that our most serious problem is the number of able-bodied men and women who in previous generations would be working but now haven’t worked in years.

Such articles evoke the ghetto’s despair, the laid-off factory worker, the aging salaryman left behind by a digital economy.

But my immediate experience is with a different group of people : the 42-year-old engineers and entrepreneurs who retired from Microsoft, Google and Apple at the top of their game; the 28 year-old Facebook and Zynga millionaires already intent on doing deals, not making products.

Who could blame them? A high-growth company can rip the bones from your back. The people who built those companies have earned the right to do whatever they want. They’re reinventing philanthropy, and investing in thousands of new businesses.

But I can’t help but feel that if all the people getting lunch at the Bellevue Club or a coffee at Buck’s just got back in the game as operators and engineers, you could open a second Silicon Valley from the result. The glow from its economic activity could be seen from outer space.

We could use another Valley right now. The entrepreneurs working from the age of 22 – 32 are enough to make everyone in high-technology wealthy, but modernizing the whole economy is a lifelong project. What if the so-called greatest generation, which turned an agrarian country into an industrial powerhouse, had retired early? In our competition with China and India, America’s digital transformation seems to me like a challenge on the same scale.

That transformation begins with the people who know how to start and build high-growth companies. These are our economy’s unicorns, the mystical magical, rare wild creatures who can create jobs.

They are creatures like Adam Doppelt. Adam made plenty of money on Urbanspoon and, undoubtedly, Cubeduel, but is already back at it again with his VRBO-killer, Dwellable. He keeps doing his own startups because he’s worried one day no one else in high technology will hire him. Last I saw him, Adam’s parting question to me was, “Have you ever met a 65-year-old startup engineer?”

The commercial Internet is only 16 years old, so that question is just now dawning on many of us. But consider my ideal of commercial success when growing up, Michael Reidy. I initially met him on the deck of his house, which overlooked a 9-hole golf course. I was friends with his 14-year-old son, Conan Reidy.

Mr. Reidy was the first businessman I ever saw, and probably the first Republican too. Conan introduced me to him as if it were an audience with the pope. I stared at him as if he were a zoo animal.

It was a Sunday, and Mr. Reidy was working from a lawn chair. The deck may have been carpeted with an astroturf putting green, or I may be imagining this detail. Printed spreadsheets drifted like tumbleweeds by my feet. I looked up to see that he had a high-ball in his hand. I asked what he was doing.

“Trying… to get… this goddamn economy…  MOVING AGAIN!” he said. Jimmy Carter had implored America’s business leaders to start new ventures, and Mr. Reidy said that he had to heed the call. He had already made enough money to kick back in Coeur d’Alene, but was up to his eyeballs again in a venture to build a chain of Hoagie’s Corners.

Long after he didn’t have to anymore, he kept on risking, building, trying. Last I heard, he’s now “doing windmills in Phoenix.”