Frightened, Clueless or Uninformed?
Posted by ladinventures
In the face of significant change and opportunity, people are often one of the three. If you’re going to be of assistance, it helps to know which one.
Uninformed people need information and insight in order to figure out what to do next. They are approaching the problem with optimism and calm, but they need to be taught. Uninformed is not a pejorative term, it’s a temporary state.
Clueless people don’t know what to do and they don’t know that they don’t know what to do. They don’t know the right questions to ask. Giving them instructions is insufficient. First, they need to be sold on what the platform even looks like.
And frightened people will resist any help you can give them, and they will blame you for the stress the change is causing. Scared people like to shoot the messenger. Duck.
The worst kind of frightened person is one with power. Someone in a mob of other frightened people, someone with a gun, someone who is the CEO. When confronted with a scared CEO, time to run. Before someone can change, they have to learn, and before they learn, they have to cease being scared.
One reason so many big ideas come from small organizations is that there is far less fear of change at the top. One mistake board members and shareholders make is that they reward the scared but hyper-confident CEO, instead of calling him on the carpet as he rages at change.
When I first encountered surfing, I was scared of it. It looks cool, but an old guy like me can get hurt. A patient instructor allayed my fears until I was willing to get started. When you first start out, the things you think are important are actually irrelevant, and it’s the stuff you don’t know is important that gets you thrown into the ocean. Finally, and only then, was I smart enough to actually learn.
I’m bad at surfing now, but at least I know why.
Comfort the frightened, coach the clueless and teach the uninformed.
Congratulations to Jason Sandquist
Posted by ladinventures
Congratulations to Jason Sandquist for making this weeks edition of “People in The News” section in the Minneapolis / St Paul Business Journal!
If I Can Change, and You Can Change, Everybody Can Change!
Posted by ladinventures
February 1, 2010If I Can Change, and You Can Change, Everybody Can Change!
There’s plenty of talk on Twitter and the web about my saying in an interview with the Globe & Mail in Toronto that the real estate industry is still “screwed up.” I first said this a long time ago on 60 Minutes, in response to a question I’d been asked over and over again.
I was asked again last year at an Inman keynote if I still felt that way. I said that I regretted my tone, and was grateful to those in the industry who’d forgiven me for it. The moderator, Brad Inman, persisted: “is the industry still screwed up?” Well, I thought to myself, I sure can’t say no, the industry is just fine. So I said that respectfully, politely, humbly yes, the industry is still screwed up.
In recounting that discussion last week to the Toronto journalist, I emphasized how Redfin had changed, how the industry has changed, and how I have tried, with varying degrees of success, to change: to be more collegial and constructive, focusing on customer service as well as technology, blending what has always been good about the industry with what we like about our approach.
It has been a tough balance. We want to be honorable members of our industry, and a good partner to our fellow brokers, but we also want to be an advocate for the consumer, and for the industry to keep getting better. The whole dialog blows up when self-critical statements about how harsh I used to be are recycled as new opinions.
Even now that the journalist published a transcript of his notes, the focus is on our saying that there’s a problem, not on whether there actually is a problem, let alone the solution. If we stop arguing over whether there’s anything wrong with real estate, we can start talking about how it could become better. Here, scribbled down during breaks in a conference, are a few ideas:
- Pay agents in a way that doesn’t creates a conflict of interest with their customers, particularly when the customer is buying a home. Paying for a closed deal regardless of whether the customer is happy tends to maximize closed deals at the expense of customer happiness.
- In fact, dump the whole coffee-is-for-closers culture, which makes brokerages feel like the Coyote, and our customers feel like the Road Runner, pecking at listings then running for cover. As I’ve come to know brokers better, I’ve been surprised at the genuine pride brokers take in their service. But I’ve been surprised too at just how deeply ingrained the sales mentality is in our culture. Before Redfin, I’d always thought that attitude was a relic of the 1970s, a caricature from Glengarry Glen Ross. But even now at industry events, I feel like a sissy when I say our agents are customer-service people, not salesmen. The audience sniggers. Outside of real estate, it’s hard to find a business with hundreds or thousands of employees without a published set of values or mission statement. Yet that’s sometimes the norm at brokerages. As a new generation of agent strikes out on Bloodhound Blog, Active Rain and Agent Genius to build her own, service-oriented brand, this attitude will change.
- Spend money on technology, not lead-generation: The reason Redfin charges half what most other agents do isn’t because our agents make less: almost all the agents negotiating deals for Redfin in 2009 earned six figures, with benefits, vacation and all their dues, telephone bills, and travel costs paid. We just spend a lot less time and money buying leads and chasing customers, so we have more for ourselves and our clients.
- Thin the herd: brokerages often make money by hiring the most agents, not the best. For real estate to be a profession like law or medicine, we have to profess to an ideal, to put our customers’ interest ahead of our own, and then ruthlessly exclude people from the profession who don’t uphold that ideal. Historically, we’ve excluded almost no one. But now that the number of agents has dipped, I’ve heard brokerages for the first time boast about agent quality. Let’s run with that idea. It’d be better for everyone if we had 500,000 well-paid agents, not a million half-starved ones.
- Invest in the rest: you can only get agents to commit to what a brokerage stands for if the brokerage makes a commitment to the agent: providing for fundamental needs like health-care, offering as best we can some basic level of financial security in hard times, creating a team-oriented atmosphere, delivering high levels of training and career development. To get the best young people to launch a career in real estate, we have to begin to compete with employers like Google and Zappos, who have made a cult out of treating their employees well.
- Get religion about publishing data. We’re indignant that 4 of the 5 most-trafficked real estate websites show only a fraction of the homes for sale but it’s our own fault for being ambivalent and persnickety about sharing data. It is abundantly clear that consumers want data; we should be the ones to give it to them. The DoJ-NAR settlement opened a floodgate, but there are still plenty of rules around how many listings we can show on a page and how consumers register. To compete against Google, we need the simplest and smallest rulebook possible.
- Be transparent about agent performance: consumers should be able to shop for agents as well as houses on our websites. Redfin surveys every customer, and publishes every response on our agent’s online profiles. The Houston MLS does the same, with some limits. Plenty of brokerages want to do this, but worry their top producers will walk over one bad review. Let ‘em walk. There isn’t another consumer product or service in the U.S. — and certainly not one that can cost a consumer $50,000 — that isn’t subject to some kind of consumer review. The truth will set us free, from lame billboards and late-night TV ads and all sorts of hucksterism.
- Stop bickering and focus on the customer: the industry can’t fix its relationship with consumers because it’s still so busy arguing with itself: about what agents should pay brokerages, about what brokerages should give agents, about who promotes whom. Every time I start to think that real estate will sort itself out, I go to a conference of brokers and panic, because I’ve never seen so many professionals invest all their passion in topics that have nothing to do with the customer. If we focus on the customer, we’ll be unstoppable.
So those are some ideas on how the industry — and Redfin, too — can change for the better. Except the ideas aren’t really our ideas. Late at night, over drinks, most everyone in the industry seems to agree that some day we need to have fewer agents, focused on the right things, and kick-ass websites of our own for connecting consumers with reliable information. The only difference of opinion is how long we wait to begin making those changes. We think the time is now.
(Photo credit: Canadian Pacific on Flickr)
Posted by Glenn Kelman on February 1, 2010 5:13 PM | del.icio.us | Digg
Posted on Monday, February 1st, 2010 at 5:13 pm by Glenn Kelman under Real Estate Controversy.
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The Worst Advice Landlord Brokers Give Tenants
Posted by ladinventures
Landlord brokers generally do a great job representing landlords. That’s what they’re paid to do, and it isn’t easy. But you shouldn’t be surprised to find that the advice landlord brokers are accustomed to offer doesn’t serve your interests. Here are the eight worst kinds of advice you’re likely to hear from a dedicated landlord broker:
1. “We can get you the best deal because we know the market.”
Bad leases are signed not because a tenant some how misses a great space but because the leases are poorly negotiated.
All brokers have access to Class A space and probably 98% of Class B space. Landlords must pay their mortgage, and they never know which broker might bring in a tenant, so they let everybody know about availabilities directly, through frequent mailings, as well as through real estate databases which brokers subscribe to.
Leases go wrong because costs soar higher than bargained for, because the leases didn’t stipulate adequate performance standards for a landlord’s performance in such areas as heating, ventilating, air conditioning, electricity and other services, because leases restricted a company’s flexibility, imposed costs beyond those bargained for, and many other reasons – every one of which arise from the way the lease was negotiated. A badly negotiated lease often turns a “great space” into a bad deal.
2. “We can get you a great deal because we have a relationship with the landlord.”
If your company has the creditworthiness which suggests you can meet your lease obligations, then any landlord would love to have you as a tenant. The suggestion that you need some kind of “in” to do a deal is ridiculous. Landlords need the business of paying tenants!
What your company really needs is a broker who will represent your interests – not the interests of some landlord with whom they have a relationship or hope to build one. This is because many landlord draft leases offer blatantly anti-tenant terms, some buildings have a high level of tenant dissatisfaction, some landlords routinely violate lease terms, and there are landlords whose financial troubles could impair their ability to perform as provided in a lease.
When a broker entices you with claims of a special relationship with the landlord, you must ask whether such a relationship is consistent with an obligation to represent you. Will such a broker be free to offer full disclosure of all costs in a proposed lease? How about management practices that will affect you? Will a landlord broker be able to negotiate forcefully on your behalf if this means opposing a landlord from whom they hope to gain lucrative agency business? Of course, you want lease negotiations that are conducted amicably. This means insisting upon a professional approach, not trying to buy goodwill.
3. “We can provide great service because we have a lot of branch offices.”
One doesn’t need branch offices to identify spaces in another city, because landlords list their availabilities through brokerage networks and databases. Landlords want everybody know about what they have, so they can start getting revenue as quickly as possible.
If branch offices are serving landlords, then they face a serious conflict of interest in their ability to protect you. After all, every landlord is a current client or a prospective client, and aggressively protecting tenants jeopardizes lucrative landlord business.
The key to signing a good lease is having good site analysis, good lease analysis and good lease negotiation and good follow-up. These depend on the caliber of the tenant representative, not the location of their offices.
4. “Don’t rock the boat and upset the landlord.”
Landlord brokers often advise tenants not to negotiate aggressively, not to demand that landlords comply with lease terms and, once a lease is signed, not to insist on the rights provided in the tenant’s lease. In a recent situation, a tenant has been paying $4 million in annual escalations, and the landlord is preventing the tenant’s representative from auditing the billings as provided in the lease, yet the tenant’s current broker – a landlord broker – has repeatedly advised the tenant that continuing to demand a proper audit would alienate the landlord. Tenants seem to be afraid a hostile landlord might become more difficult to deal with.
Yet in our experience, landlords respect tenants who know their rights and pursue their interests in a business-like way.
While it’s true a tenant often needs a landlord’s cooperation, it’s also true a landlord needs a tenant to help pay the mortgage, and it’s generally cheaper to keep a current tenant satisfied than to incur the cost and possibly lost income resulting from a dissatisfied tenant moving out.
5. “Hurry up and get the deal done.”
More than anything else, landlord brokers push tenants to get a deal done. These brokers will tell tenants that if they don’t quickly commit to a space, somebody else will take it. Such pressure is especially intense in a “hot” market favoring landlords. One tenant, a major accounting firm, told us of being shown space by a nationally-known landlord broker. At virtually every location shown, the broker was mum on details but advised, “you’d better hurry up and make a decision, this space is going to be gone soon.” The tenant soon decided that the landlord broker was not providing the service they sought, despite its branch offices, large staff and national reputation. The tenant moved on and selected a tenant representative to help them find a space that will serve their needs.
Hurrying into a deal risks neglecting comprehensive due diligence, overlooking costly drawbacks in a building, failing to properly analyze the risks and total costs of a landlord’s draft lease – and signing up for a transaction which can become a serious liability to your company.
6. “Since you’re such a big tenant, you have very few alternatives.”
Some of the worst leases have been signed by big companies probably because top executives felt they had to be in a particular building. While it’s true the number of large spaces in a particular area are limited at any point in time, this definitely doesn’t mean big tenants must accept whatever terms landlords care to offer.
Getting a good deal, however, means big tenants must gain every possible bargaining advantage. Tenants must have a representative serving tenants exclusively – and not the interests of landlords.
It’s critically important for a large space user to start the site search early. A million square foot tenant should start at least five years before lease expiration. Starting early means you’ll be able to see more spaces and include options that require building from scratch as well as different options for leasing vs. owning. There are almost always more alternatives for large space users than you might imagine, including existing buildings in the same area that can be repositioned, buildings in a different area once considered off limits, and build-to-suits.
By developing viable alternatives, objectively analyzed in detail, you will understand your true costs and trade-offs. Only with this background can you know if a premium is being demanded for the solution you prefer, and whether it is a premium you think is worth paying.
Equally important, all this means you’ll be able to pursue preliminary negotiations, and if they don’t lead to satisfactory terms, you’ll have time to walk away and begin negotiations elsewhere.
7. “The landlord’s draft lease is boilerplate, standard terms.”
So-called “Standard terms” invariably mean pro-landlord terms because leases are drafted by landlords which are naturally protecting their interests. You wouldn’t expect them to do otherwise.
“Standard terms” often includes tenant budget-busters like operating expense loopholes, mark-ups on mark-ups, vague landlord performance standards and no audit rights.
Don’t be pressured into accepting “standard terms.” A lease negotiation should be driven by your business objectives, not by a landlord’s desire to avoid risk (and pass it on to tenants like you). Your business needs must be translated into lease terms to be secured during negotiations.
8. “Just focus on rent and workletter – let lawyers take care of the fine print.”
Many corporate executives imagine they’ve locked in their biggest costs by shaking hands on these two terms.
However, the rest of the lease is loaded with costs. There easily are 18 or 19 significant non-rent costs in a typical lease, many hidden, and it’s contrary to the interests of landlord brokers to identify these costs – or do anything else that might jeopardize a deal.
Lawyers don’t provide complete protection for tenants because they aren’t trained to analyze, nor have hands-on experience with, business issues which are responsible for so many excessive lease costs. Lawyers don’t claim to know how desirable or undesirable a landlord draft lease is from the standpoint of the current real estate market. Lawyers aren’t experts on the economics of building operating systems. Lawyers aren’t expected to know how various ways of charging for electricity will affect costs. Lawyers don’t audit landlord billings, so they don’t see whether particular landlords honor or evade lease terms – and what must be done about it. Lawyers typically review a lease without ever visiting the building, and many problems are missed because a lease didn’t address certain things which must be seen to be appreciated – or avoided, as the case may be.
Best advice!
Overall, the most common reason tenants seem to take bad advice from landlord brokers is that they’re impressed by the big deals such brokers have done. But as talking points, big deals are meaningless unless they’re good deals for tenants. The fact is that a substantial number of leases over 100,000 square feet have serious problems, even though these leases were reviewed by competent lawyers.
It’s shocking to see how many large leases have inadequate operating expense controls, high-cost electricity formulas, mark-ups on mark-ups, vague landlord performance standards, weak sublease rights, limited audit rights and so on. In some cases, lease problems became so serious that heads rolled.
Best advice: when you’re interviewing a broker, ask not about what deals a firm has done but about how a firm has protected tenants. You’ll probably find out all you need to know about the deals while discussing how a broker analyzes sites, evaluates landlords, negotiates leases, negotiates other kinds of real estate transactions, monitors build-outs, audits billings and in other ways protects tenants. How else can you be sure that a broker and the resulting lease will protect your company’s vital interests?
via: http://www.ctrr.net/ctrr8worstkindsadvice.htm
Rules For Ideas Worth Spreading- Seth’s Blog
Posted by ladinventures
If you’ve got an idea worth spreading, I hope you’ll consider this random assortment of rules. Like all rules, some are made to be broken, but still…
- You can name your idea anything you like, but a google-friendly name is always better than one that isn’t.
- Don’t plan on appearing on a reality show as the best way to launch your idea.
- Waiting for inspiration is another way of saying that you’re stalling. You don’t wait for inspiration, you command it to appear.
- Don’t poll your friends. It’s your art, not an election.
- Never pay a non-lawyer who promises to get you a patent.
- Avoid powerful people. Great ideas aren’t anointed, they spread through a groundswell of support.
- Spamming strangers doesn’t work. Spamming friends doesn’t work so well either, but it’s certainly better than spamming strangers.
- The hard part is finishing, so enjoy the starting part.
- Powerful organizations adore the status quo, so expect no help from them if your idea challenges the very thing they adore.
- Figure out how long your idea will take to spread, and multiply by 4.
- Be prepared for the Dip.
- Seek out apostles, not partners. People who benefit from spreading your idea, not people who need to own it.
- Keep your overhead low and don’t quit your day job until your idea can absorb your time.
- Think big. Bigger than that.
- Are you a serial idea-starting person? If so, what can you change to end that cycle? The goal is to be an idea-shipping person.
- Try not to confuse confidence with delusion.
- Prefer dry, useful but dull ideas to consumer-friendly ‘I would buy that’ sort of things. A lot less competition and a lot more upside in the long run.
- Pick a budget. Pick a ship date. Honor both. Don’t ignore either. No slippage, no overruns.
- Surround yourself with encouraging voices and incisive critics. It’s okay if they’re not the same people. Ignore both camps on occasion.
- Be grateful.
- Rise up to the opportunity, and do the idea justice.
First Look…CoCo: Coworking and collaborative space in LowertownSt. Paul
Posted by ladinventures
Three-Word Phrases That Can Make Your Start-Up Business A Success
Posted by ladinventures
(Editor’s note: Dharmesh Shah is a serial software entrepreneur and the founder and CTO of HubSpot, which provides marketing software for small businesses. This column originally appeared on his blog. )
For some reason, I like wordsmithing and trying to make phrases smaller (while still retaining some meaning). Not long ago, when I was up much too late, I tried to come up with some of my best startup advice and see if I could reduce it down to exactly three words.
One thing led to another, and I became obsessed with it. So obsessed, in fact, that I had put together 47 before I was able to make myself stop. While it’s likely not the most brilliant startup advice you’ve ever read – it has a decent chance of being the shortest.
Startup Triplets: Startup Advice In Exactly Three Words
6. Avoid tempting distractions.
7. Support customers maniacally.
11. Encourage diverse thinking.
13. Defer renting space.
16. Persist through downturns.
19. Recognize revenue consistently.
36. Encourage rational debate.
42. Cancel unnecessary meetings.
43. Improve employee’s resumes.
46. Maintain your relationships.
Note: After I originally posted this list, Guy Kawasaki (yes, the Guy Kawasaki) was kind enough to post some of his own triplets. Here are a few of them:
48. Sales fixes everything.
49. Ship then test.
50. Do not partner.
You can see his full list here: Guy Kawasaki’s Startup Triplets.
You’re way smarter than I am – and I’d love to see your own startup triplets. Share them in the comments below or post it to twitter (with hashtag #StartupTriplets). I think you’ll find it fun – and addicting.
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- The start-up chronicles: It pays to be bull-headed (this site)
- The start-up chronicles: 5 questions for prospective entrepreneurs (this site)
- Why do entrepreneurs flock to loudmouths as mentors? (this site)
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The Ubiquity Of Competition- Seth’s Blog:
Posted by ladinventures
Sure, there are playoffs in football, but competition is everywhere, we just forget to notice it.
There are three hundred photographers looking for work in a particular specialty. One puts a creative commons license on his shots in Flickr and they start showing up in many places, from presentations to brochures. Which of the 300 photographers has won the competition for attention? Which one of the three hundred has shared his ideas enough to be noticed?
There are twenty towns you can choose for your family’s new home. One invests in its schools, has a focus on inquiry, AP courses and community, while the others are muddling through, arguing about their future. Which one commands a higher premium for its houses?
There are a hundred new kinds of snacks and energy bars at the checkout of the supermarket. One is a little bigger, a little more exciting and a little closer to eye level. Which one of the hundred wins the battle for your impulse buy?
There are fifty people applying for a job. Forty nine have great credentials and beautifully standard layouts on their resumes. One resume was hand delivered to the CEO by his best friend, together with a glowing recommendation about a project the applicant did for the friend’s non-profit. Who gets the interview?
There are ten great jobs for the superstar programmer who is looking for a new challenge. One offers offices not cubes, free lunch, great customer support and the freedom to work on interesting projects. Where does she choose to apply?
There are 30 places that sell bumper stickers. One shows up first in the Google ads when I do a search. Which one gets my business?
There are seventy houses for sale in town. One of them is represented by a broker who is a pillar of the community, a friend of many and a role model for the industry. Which one gets more people to its open house?
There are eighty million blogs to choose from. Thanks for picking mine to read today.
You don’t have to like competition in order to understand that it exists. Your fair share isn’t going to be yours unless you give the public a reason to pick you.
Dual Agency: The illusion of individual savings & the real cost to society - Real Estate Cafe Blog
Posted by ladinventures
Exposing the hypocrisy of dual agency, and it’s evil counterfeit buyer agency twin, “designated agency” has been a crusade for real estate consumer advocates, like The Real Estate Cafe, for more than 15 years. For the most part, proponents of buyer agency have stressed the financial benefit to individuals — something an article today in the leading real estate new service fails to even address. Instead, the article may give the mistaken impression that buyers can maximize their savings by working with a dual agent because of “…a commission reduction to cover repairs or a lower purchase price, if they represent both sides.”
Those savings are trivial by comparison to the deep discounts skilled buyer agents can negotiate for their clients. For example, The Real Estate Cafe saved clients over $1 million dollars during one recent year (see map of selected savings, all but one over $100,000).
Still, what’s more important from a policy perspective is to switch from debating savings at the micro-level to costs at the macro level, ie. the cost to society. With one in four mortgages underwater, it’s essential for legislators and regulators, both a national and state levels, to investigate whether dual agency, and related “blind” bidding wars, helped inflate the housing bubble and to enact reforms to prevent a repeat in the future.
Research findings from one snap shot, a Cornell study on dual agency, suggest dual agency helped create overvalued housing prices, which taxpayers are now being forced to bail out. More specifically, Cornell researchers found that listing agents increased asking prices by 10 percent “when an internal buyer with a high willingness-to-pay is available,” and generated sales prices 5 percent higher on transactions involving in-house sales. Ironically, researchers concluded that the net impact on the market was insignificant because “agents cut sale prices to capture both sides of the commission or trade favors with colleagues.” That’s one of the strongest arguments to outlaw inside trading, and require no conflict of interest agreements from any real estate agents involved in foreclosures. (As CNBC recently reported, short sales are already plagued by fraud and kick backs.)
Even if individual buyers don’t understand the financial benefit of using a buyer agent, shouldn’t taxpayers have an advocate to prevent buyers from overpaying any time government subsidies are used to purchase or finance a property? Yale Economist Robert Shiller may have had something like that in mind last year when he told ConnectNY that ever family in America should have a personal financial advocate. Fortunately, the cost of paying for that advice is already built into the typical real estate transaction. If you’re NOT using a buyer agent, you’re giving the listing agent / agency a double pay day whether or not they are acting as disclosed dual agent (something the article above also fails to mention).
Speaking as a real estate consumer advocate, my hope for the new decade is that (1) dual agency laws will be repealed, (2) any company involved in short sales or foreclosure disposition will be required to sign a no conflict of interest policy which includes dual agency, and (3) in the future, “blind” bidding wars replaced by controlled bidding environments, like N-Play, to maximize transparency and minimize deceptive buyer manipulation.
Until then, we invite readers to discuss what regulatory reforms are needed to protect real estate consumers; and if you are buying a home, we would be glad to discuss how The Real Estate Cafe can help you save money. Let us know when that’s convenient.