September 7, 2008
Barack Obama and John McCain are going to spend the next two months arguing over the economy, mostly about how to foster innovation. The politicians blame politics. In last Sunday’s New York Times, Cisco & Google engineering executives talked about the same problem. They blame the lack of engineers.
Both are right. But the real problem isn’t that we have to be wiser or smarter. We just have to keep taking big risks. Taking big risks is where Americans have always stood head and shoulders above everyone else: get-rich-quick schemes have been our specialty. But now the new fashion among the professional risk-takers has been to risk very little.
$100,000 is the New $10 Million
Venture capitalists are racing to miniaturize themselves toward the vanishing point. One of my favorite bloggers, Fred Wilson, recently asked why not “back 10 teams at $25,000 each instead of one team at $250,000”? Just last week a Seattle venture capitalist boasted that “we are seeing impressive companies being built for under $100,000.”
To which one can only say: Really? Which companies?
Just do the math. Two engineers can last 12 months on $100,000, which is great for building a prototype, but often nowhere near enough to build an ambitious product, much less a business. Yes, hardware and software have become nearly free, but people have always been a startup’s main cost.
Spending Less, Doing Less
What’s usually happening is we’re spending less by doing less. Behind the steady drumbeat of startups, any TechCrunch reader can’t help but notice how whimsical many have become.
Trading college-girl gossip or graphing rock-band popularity is cool but we also need entrepreneurs willing to spend the time and money to f*** with the order of things. Rather than building game-changing technologies that can make an entire segment of the economy better, most startups are using what’s already out there to create a new media site. Silicon Valley, meet Hollywood.
What’s Really Scary: Nobody’s Scared
Everyone knows that last quarter was the first since 1978 that a venture-financed company didn’t go public. Mid-stage capital dropped 15%. Late-stage investing is now cashing out entrepreneurs before their companies have made money. And what’s really scary is that nobody’s scared.
Bill Gurley says an IPO isn’t worth the Sarbanes-Oxley headaches. Others are just waiting for the market to tick up. But if those were the real problems, we’d see more accretive acquisitions. Instead, even YouTube is struggling to make money for Google.
Most entrepreneurs don’t even aspire to build a self-sustaining business. Among the 25-year-old entrepreneurs I know, that goal seems as dated as the Brezhnev-era Red Army.
You Want to Get Funded? Think Small
It’s an attitude investors have encouraged. When I came of age in the 1990’s, VCs were always challenging entrepreneurs to think big. It helped shake us out of our navel-gazing reverie and into a broader world. Now, chastened by over-funded companies from the dot.com boom, many investors look for ways to cut an idea down to size.
Of course, some businesses don’t need a lot of money to get big. Others are happy to remain small. But there are big ideas that take time and money, and though there is still plenty of funding available, no one could deny the mood among Internet startups has changed.
Could Amazon’s Jeff Bezos show up on Sand Hill Road today to pitch a company that would lose money on software, on warehouses and distribution centers – for years? He might get his idea funded; he’d more likely get talked out of it. It’s so easy to nudge enterpreneurs — and people in general — toward smaller things.
What I’m Looking for in TechCrunch50
We can’t all be Amazon. But we do have to make sure that the volatile mix of money and energy – which occurs in only a few places, at a few moments in history — can still easily form around the big ideas, not just the small ones. This is why everyone is eager — why am I so insanely eager? — to see what TechCrunch 50 delivers: will startups debuting at tomorrow’s big conference make Silicon Valley’s place in the economy smaller or bigger?
The judges may argue over which contestant is the most clever or polished, but for those of you scoring at home, there’s room on the card for another column. Which startup is most likely to f*** with the order of things? We need a few of those too.
September 3, 2008
Everyone would rather believe in strategy than talent. Strategy can be argued over, analyzed, refined, rejiggered. Talent just is.
This is why sports announcers dissect football games like chess tournaments, even though most contests are won by the team with the biggest, fastest players. In a world too-often ruled by chance and genes, it’s nice to feel that a few clear decisions can make a difference.
The folks analyzing the Google Chrome browser are no different, developing persuasive (and often beautifully crafted) theories as to why a Google browser is a brilliant strategy. But when you think about it, the world didn’t need another browser before Chrome, and Google didn’t either: Mozilla Firefox, which is committed to the same open standards as Google, has the same strategic value as Chrome, and more market-share to boot. Apple Safari will use the same engine as Chrome. Strategically, Chrome is redundant.
Ah, but wait ’til you run Chrome. The software is fast as a track bike and just as simple and beautiful too. Best of all, Chrome’s application shortcuts let you launch a web application in full-screen mode, so that the whole experience feels like an application instead of a web page running in a browser loaded down with address bars, toolbars and browser menus. For a site like Redfin, which was designed to run as an application without any scrolling and minimal server calls, the visual effect is dramatic. It’s not an exaggeration to say that, on running Chrome for the first time, my heart was racing.
The cumulative effect demonstrated, to me, a triumph of talent over strategy. Building a browser could be a good strategy or a bad one, depending on how well-built the browser is. And this browser seems very well built. I got the feeling that Google developed Chrome because it could, almost as a show-off move.
Like Microsoft in 1997, none of the software giants has as much talent today as Google. And like Microsoft, Google has stopped inventing whole new categories of software, and instead just begun improving — sometimes dramatically, often by sheer brute force — existing products. How many people would have called Microsoft the Evil Empire if it had developed a copycat product to compete with a partner like Mozilla?
The good software will keep coming. While we see resumes every week from Microsoft, Amazon and every other software company under the sun, a Google engineer has never applied to work at Redfin.
And that’s Google’s true competitive advantage right there: not in its strategy, but because it has become a very good place for engineers to work, perhaps the best large place in the world. Any idiot can build the best strategy if he has the best software engineers, but it takes a genius to find those people and keep them happy.
(Note: Because Redfin runs a lot of code on the browser, we detect right up front what type of browser you’re using, and warn users if a browser isn’t fully supported. Chrome isn’t fully supported but if you ignore the warning and use the site, everything seems to run great so far.)
September 2, 2008
Some blog posts give us a glimpse of our own obituary. When a Seattle journalist last week speculated on what went wrong at a startup, an anonymous mob formed to attack the CEO, comment by comment. It was hard not to feel like you were watching your own beheading.
No one objected. And almost everyone in Seattle read the post. As a French courtier observed, “the people we call our friends are merely the ones we know would not themselves murder us, but would let the murderers have their way.”
The CEO in question was undoubtedly a hard-charging Maniac. But that’s not always bad. I tend to divide leaders into two types: The Maniac and The Professional. The Maniac is emotional, demanding, unreasonable. His great gift is high standards. He gets away with it only by being brilliant and charming.
I once interviewed someone managed by the most brilliant, charming business leader in the world: Steve Jobs. The experience was, the interviewee explained in a thick French accent, “the most harrowing of my life.”
Maybe it’s impossible to accomplish anything insanely great without a Maniac — anyone running a start-up team has to have, at the least, the glands of a Maniac. But anyone with a heart spends nights regretting it.
Whether we acknowledge it or not, plenty of leaders try to be like Steve Jobs and no one else can be. A lot of startups blow up because of the Steve Jobs syndrome.
Lately, I’ve found a second role model: the manager at the Capitol Hill QFC. Unassuming, a little pink in the skin, slightly rotund, the guy who runs my neighborhood grocery store is the portrait of The Professional. He’s a far cry from Steve Jobs, but his admirable qualities at least seem repeatable. I’ve studied them carefully:
- He’s accessible. On any busy weekend, he’s standing at the head of the registers, ready to direct a customer to a can of beans. He carries a clipboard, which he tucks under his arm as soon as you approach (what does he have written down there?)
- He shops in his own store, loading up in the frozen food aisle late at night, joking around with the graveyard employees stocking the shelves. Straining to hear their conversation, I once saw one of them — probably earning less than $10 an hour — give him a hug.
- He’s a part of the team. He wears the QFC outfit with pride, his grocer’s tie nicely knotted. Though he’s not very tall, his posture is so straight he almost seems to be leaning back, as if better to survey a Thackeravian bustle of commerce. He doesn’t stand apart from his team, except by how he carries himself.
- He smiles a lot, almost as a form of breathing. Since I believe that a company’s brand, like a painting or a poem, is essentially just an emotion sustained across time and between people — his smile is important to me; at some level, one of the emotions expressed by a brand has to be a form of joy. It starts at the top, and it can’t be faked.
- He works hard. Late at night and on weekends, he’s always there.
I know it’s uncool to have a grocer as a role model alongside a tech god, but a lot of high-tech managers, myself included, could learn a lot from Mr. QFC.
September 2, 2008
It takes a lot to freak out tattooed, motorcycle-riding — but sweet as apple pie — Redfin field agent Daren Carper. Most of the homes he visits are your typical freshly painted, ready-to-move in pads. But sometimes things get a little creepy.
It’s sunset and Daren and his client are touring a 100-year-old mansion in a posh part of town. From their first steps on the creaky, semi-rotted front porch, it was obvious that the place hadn’t been updated or well-maintained for decades. Cue Daren …
Inside we found original wood floors that were warped and buckled, and high-vaulted ceilings that made the creaky floors echo throughout the house. We explored the house and found several issues that seemed to come from neglect - the house felt like a mausoleum that hadn’t been touched since the 70s. That, combined with the fact that it was an old house, was already starting to make me feel a little creeped out.
We started to explore the outside of the house hoping to find an exterior basement a
ccess that might have washer and dryer hookups, and also give us a chance to see what the wiring and plumbing looked like. We found a rotted access hatch on the side of the house, and went underneath the mansion to explore the unfinished basement. The ceilings were about five-and-a-half feet high, and spider webs threatened to strangle us wherever we went; if the house hadn’t been touched in 30 years, nobody had been in the basement for about 50.
There was no light in the basement, so I was cowering behind my four-D-cell Mag-Lite trying to see what was down there. My client had has hand on my shoulder, and was just steps behind me. The image of one of those horror movies comes to mind where you are yelling “DON’T GO IN THERE!” at the screen, but the characters in the movie are too stupid to hear your advice - in our case the curiosity was just too much.
My flashlight caught a shadow of something interesting in the back corner of the unfinished basement. Fighting our way through the fallen insulation and spider webs, we continued further underneath the house. My flashlight caught an out-of-place wall in the basement. As we got closer we realized that it was not only a wall, but a full room. Again, curiosity got the better of me, and with my hand shaking I reached to open the door. I wasn’t sure what to expect, but I was ready to swing my flashlight like Babe Ruth.
We found a single folding chair with a bare-naked lightbulb swinging overhead — a 40-year-old abandoned torture chamber in the basement of a mansion in a nice neighborhood (picture the James Bond torture-chair scene in Casino Royale). I felt my client’s grip on my shoulder tighten, and I quickly swung the flashlight around to make sure nobody was rushing from the shadows with some ancient medieval weapon. As far as I could tell we were alone. My client leaned over and whispered “This is f*ing creepy!!! Let’s get the hell out of here!!!” and we bolted. Finally our curiosity was satisfied, and we were able to run from the house without looking back.
What’s your creepiest, wackiest, wildest home-tour tale? Redfin’s field agents tour homes day in, day out, so we have plenty more to share if you’re too shy. Maybe next time we’ll tell you about a tour in Wonderland, minus the hookah.
August 29, 2008
We’ve been experimenting with messages in various locations across Redfin.com. Recently, we placed an announcement in a message box at the top of our map page. Once the box is closed, it disappears until we run a new message.
When we released the latest version of Redfin.com, we ran our first message this space announcing our new neighborhood pages. The text was: “New! Pricing trends for every neighborhood. And more.” With “neighborhood,” we linked to a respective city page for each market. With “more,” we linked to the Redfin blog post about the features of the latest release.
We were worried that placing an announcement across the top of the map would annoy people searching for homes. We ran the message for a week and tracked how often people dismissed the box and clicked-through to the links.
Click-Through Rate
The total click-through rate (CTR) for the message box was high (1.95%), higher than any other message location on Redfin.com. For the “neighborhood” anchor text, Seattle (2.93%) had the highest CTR and Southern California (1.35%) the lowest. The anchor text linking to the blog post had a CTR of 0.15%, which is not surprising given that it was the second link in the message.
Dismissal Rate
The dismissal rate for the message box was 1.50%. DC had the highest rate (1.86%) and Boston had the lowest (1.08%). The dismissal rate was lower than we expected. The low rate is likely due to the fact that users: 1) weren’t seeing the box; 2) were unable to find the X to close the box; or 3) didn’t mind having the box on the screen.
We’re thinking about trying out a few different treatments for the box- different colors and different length messages to test how the dismissal and click-through rates change.
What about you? Did you notice the message? Did you leave it open or click it away?
August 27, 2008
“Did hell just freeze over?” Redfin’s Bryan Selner asked me late last night. For a moment, I thought someone at Redfin had spontaneously washed the dishes.
But Bryan was talking about Redfin’s posting yesterday on Bloodhound, one of the largest Realtor blogs, about which of our site’s search filters are most popular, and which filters we should do next.
Who knows what possessed me to choose this post as our first on Bloodhound. What shocked everyone at Redfin was that Bloodhound would let us post anything at all. I’d forgotten that Bloodhound bloggers had only last year called me “an oily liar” and “a low-level con man.”
At a time when Redfin had every Realtor up in arms, it was the quality of these insults that stood out: phrases like “recidivist miscreant” and my personal favorite, “rotarian socialist,” made everyone else seem half-hearted and dull.
And so I began reading. And then to appreciate Bloodhound’s point of view — even if I disagreed with it. What I got from the blog was how to be a better citizen within the real estate community: no less opinionated, but less self-righteous. We eventually apologized, awkwardly, for how we’d talked about the real estate industry.
Then to our surprise, Bloodhound sent us an invitation to their conference, and after that, a Wordpress log-in. It seems that what we liked about Bloodhound, Bloodhound liked about us: we both love to let the fur fly, sort of like Mary Matalin and James Carville.
This new tone doesn’t mean Redfin has gone soft on our consumer advocacy. We’ve just gotten better at it — fighting off anti-rebate laws, publishing for-sale-by-owner listings, offering more analytics — without disrespecting others in real estate.
Thanks to Bloodhound for giving us a chance. And Redfin readers, please let us know what search filters you’d like to see next: parking, townhouses, pools? Or other features, like drawing your own neighborhood outlines on our map?
Photocredit: Flangum on Flickr
August 26, 2008
After reading a midnight-oiled TechCrunch post on Animoto, the new make-a-music-video-of-your-photos website, we decided to give it a quick shot for one of our own listings, in Bellevue (we had to use a Redfin listing because it’s copyright-infringement to take another broker’s):
I wanted to use Prince’s “Let’s Go Crazy” for the music, but we don’t have the rights for that either. As our lead search engineer & award-winning documentarian can tell you, it’s a problem for any aspiring film-maker.
Do you think this would make you more likely to look at a listing? And what’s the best song for this house?
August 25, 2008
A strange thing happened in online real estate last Friday. After three years of fierce competition and $100+ million in venture capital, TechCrunch’s Erick Schonfeld finally asked real estate websites the $24,000 question: who has the most homes for sale?
“The most important success factor for these sites,” Erick writes, “is how comprehensive they are.” By comprehensive Erick means within a market: nobody wants to see every listing in the U.S., just every listing wherever he or she wants to live.
So Erick published a study from Roost, a lead-generation site with a feed from the MLS — the database that, in nearly every market, all brokers use to share listings. (Redfin has MLS listings like Roost, but also for-sale-by-owner homes and bank-owned foreclosures not yet in the MLS.)
The study showed that on the strength of its MLS access, Roost has far more broker-listed properties than sites like Trulia, Yahoo and Google — which have to get their listings through one-by-one agreements with brokers.
Redfin wasn’t included in the study, and can’t even get a copy to assess its accuracy. But it was sad for us to see everything but the kitchen sink thrown at the study, from people who never denied its basic conclusion: that a site with MLS access has many more homes for sale in a market than one that doesn’t.
And while the debate in TechCrunch’s comments section raged over the quantity of listings, no one acknowledged the huge differences in quality: what brokers share with media sites is only a teaser photo with a few basic details, rather than the complete MLS listing shown by Redfin and Roost, with dozens of fields and photos, updated as transactions occur. The difference in quality is plain for anyone to see: compare Redfin’s Washington DC listing to what appears on media sites.
But since everyone focused on Swiftboating the quantity claim, let’s take a look at the arguments:
But here’s what’s great about TechCrunch. Erick didn’t just print the he-said she-said arguments between websites. He queried all the websites himself, and found that Redfin had slightly more listings (6,300) than Roost (6,036), and Roost had far more listings than Trulia (4,395).
Zillow, which had the lowest number of MLS listings in the Roost study, claimed the most listings of all, 7,661, but Erick couldn’t confirm this because Zillow’s site searches on the county of San Diego, not the city. Redfin gets listings from Zillow as well as the MLS, so any listings on Zillow that aren’t on Redfin should appear shortly.
Hats off to Erick for having done the research.
He shouldn’t have had to. The pledge of every new real estate site has been to bring transparency to real estate. But so far, most sites have been anything but transparent about what they have and what they don’t. Now Joseph Ferrara at Sellsius blog is asking us all to stop hiding the ball and say where our listings come from and what we’re missing. Since April 2008, Redfin has done just that. Trulia, Yahoo, Google, please step forward.
Photo credit: Roberdan on Flickr.
August 23, 2008
In a darkened, rank room the size of a windowless van, ten Redfin folks spent most of this week peering through one-way glass at people trying to search Redfin’s site.
We expected to be embarrassed. And sure enough, I was often flushed at all the ways we could have made our software simpler. But what we really learned was that people were remarkably good at listening to our software, just not our marketing.
Every time we tried to give the usability subjects an ad on our own site about how great we are, they didn’t merely dismiss it or bypass it. They didn’t even ignore it. They never even saw it.
It was eerie, like an Oliver Sacks experiment. We put up ads about Redfin’s home tours, and then after asking these very clever, web-savvy people if they saw anything about tours, watched as their cursor orbited the ad in a long, fruitless search.
Engaged in an arms race where ads now run in once-thoughtful places like elevators and in bathrooms, people would probably grow another organ to block ads, perhaps a new elaborate eyelid, if the mind hadn’t already blinded us. The region of the brain that formerly handled music or speech is probably doing ad-blocking full-time.
(I spend a lot of time trying to imagine what the medieval mind was like, uncluttered by ads.)
But even today people can still see just fine. When we exposed a button for scheduling a home tour, the usability subjects went right for it, because it was part of the software.
Folks previously engrossed in our search site were suddenly making quantum leaps of deduction about our business model: “you have a tours button, so you must have agents in addition to a website, so you must make money as a brokerage, probably splitting the commission since it’s partially on the web.”
An ad couldn’t have said it better. Our jaws were on the ground.
What that means for us is that we have to build better software, not better ads: a home-buying application that guides people all the way through escrow, rather than a search site that reels customers in so it can show them an an ad for our brokerage business.
But as we emerged into the sweet thickness of a Seattle summer night, I couldn’t help but wonder about what we saw and what it means for the whole Web, half of which is built on the idea that people will come to your website for one thing, and then leave intent on doing something else.
This isn’t to say that ads don’t work. Google ads are spot-on: they show you what you’re looking for, when you’re looking for it. And glossy ads or video ads pack an emotional punch that can create tearful, fierce brand loyalties. It’s just banner ads that don’t work, at least not very well, because — branding value aside — they actually want you to do something now, when you came to the website to do something else.
I know that some websites can pull it off, diverting users very efficiently toward their sponsors. But we’ve never figured it out. Watching people in the usability studies, I wondered how anyone does.
August 15, 2008
The Donald bailed Ed McMahon out of foreclosure today. Maybe Trump plans to single-handedly fix the housing slump?
Ed’s home in Beverly Hills doesn’t seem to fit Donald’s gold-plated style, but a Redfin Forums poster pointed out a stunna in Northridge he should consider.
It’s supposed to be a replica of Graceland, but I’ve been there and I don’t remember a stuffed bear holding a tennis racket in the Jungle Room, just a lot of avocado green carpet … on the ceiling, too many ashtrays and furry furniture. But there are touches Trump might like such as dazzling gold furniture, a warrior to stand guard while he bathes, dolphins frolicking by the pool and even his very own Oval Office. 
And it’s a steal at $158/square foot, when other homes in Northridge sold for $259/square foot. Trump paid a little less per square foot for Ed’s digs - $656 vs. $677.
Maybe an Elvis fan will snap up the faux Graceland on Saturday as it is the 31st anniversary of Elvis’ death.
Have you seen other properties that should be on Trump’s short-list? Send us your best candidates!
