By Danny Kucharsky

Tech disruptor real estate brokerages can survive and prosper but only if they have the right business models, says Romana King, director of content at Zolo.

She was commenting on last week’s closure of TheRedPin, which shut its head office doors at Church and Front streets in downtown Toronto after being in business for seven years. The online brokerage went into receivership almost a year after CEO Keith McSpurren, who has a solid background with start-ups, was hired to revamp the company.



TheRedPin “couldn’t figure out how to make it profitable enough to keep being a disruptor,” says King. She maintains that Zolo, founded in 2012, has been profitable since its second or third year of operations.

According to The Toronto Star, TheRedPin’s investors included the Trilogy Growth fund financed by ONEX Corporation founder Gerry Schwartz.

“It was a high-risk, high-reward situation,” McSpurren told The Star. “If I figured it out there would have been great rewards.”

The closure of TheRedPin affects an estimated 80 real estate agents and a number of office staffers, including a team of software and artificial intelligence (AI) developers who had been brought on by McSpurren. Representatives of TheRedPin could not be reached for comment.

Although it was well-financed, TheRedPin closure shows that “real estate is a hard industry to disrupt and tech brokerages are hard to scale,” John Pasalis, president of another tech disruptor brokerage, Realosophy, said on Twitter.

Tech disruptors such as Zolo, Zoocasa, Realosophy and TheRedPin have viewed real estate brokerages as old businesses that can be improved upon through the use of technology that provides solid market intelligence, King says.

But “the difficulty with real estate in Canada is that you have to work within board regulations and you have to work within the rules of real estate. For that reason, there’s only a certain number of ways you can structure a real estate business.”

In addition, new tech start-ups face an uphill battle because established real estate brands have decades of marketing behind them. “That’s why I think it’s so important that a tech start-up that really wants to be part of this business needs to address whether or not they’re a profitable business model before they go out and make their waves.”

The “very tried, tested and true” real estate industry in Canada will require more than a couple of tech start-ups to change the way the business is conducted, she says.

King suggests that TheRedPin over-relied on providing discounted services and commissions to buyers and sellers. “A place that markets itself on discounts – when I’m talking about my largest asset, I have trouble with that.”

She adds TheRedPin was trying to develop AI applications when it shut down. “We’re not there yet” she says of the use of AI in real estate. “When you double down on new tech to try and build your business model, that’s risky. You either have to have deep pockets or a really great business model.”

King says Zolo “flew under the radar” for years while it built its business model and only “popped our heads up” and started marketing significantly when that model worked consistently.

Zolo’s gross revenues have increased from $148,471 in 2013, its first year of operations, to $16.1 million this year, 39 per cent higher than last year. “We’re still growing year after year, even though the market has turned in the GTA,” King says.

10 COMMENTS

  1. In her interview re her book, “Women, Work & the Art of Savoir Faire”
    Mireille Guiliano answers one of the questions put to her this way, proving that branding doesn’t only apply in the real estate business, but in life in the business-world in general.

    Naturally one has to have certain skills that contribute to their individual success. But second to none is the advice her mother gave her to prepare Mireille for success in the business world, in particular in an environment largely occupied by men, (she was born in 1946, four years younger than me) where the words ‘success’ and ‘woman’ often even now are sometimes not read simultaneously.

    An interesting point of reference, here we are in 2018 as I write, and in today’s world news, women in Saudi Arabia are now officially permitted to drive for the first time, in their culture. Yet some of their women were running businesses, sometimes internationally.

    I also learned Mireille’s mother’s advice, this at a very young age, not yet a teen, from adult women who were not businesswomen, but who stood out in their private lives, were in charge of hiring household help, like the ones In the recently reprinted “Perfection Salad” title, I repeat: nothing to do with recipes as such… but rather an academic tome of life as it was at the time – post War North America; women were driving cars in the 1940’s and 1950’s, supported their husbands in business and related entertainment, sometimes referred to a rose in his lapel, sometimes giving up their own careers in order to enable their husband’s success getting to the euphemist corner office.

    Like first we eat with our eyes, as I often note in my original recipes, the same process definitely applies to branding in business. It’s true; the eyes are the windows of the soul. And perhaps sometimes more so in our industry than some others.

    You truly do only get one chance to make a first impression. And that also speaks to marketing and advertising materials. And the quality of your handshake is paramount, too.

    One word of advice I would add is: if it applies to you, stop giggling. There’s absolutely nothing wrong with genuine laughter, but giggling is nothing if not annoying. If you want to be taken seriously as a business woman, simply stop that. If you giggle when you are nervous, it belies your competence scale. Likewise grinning inappropriately, and cracking jokes, making crude remarks and using foul language. Watch your mouth. It doesn’t make you “one of the boys’ empire.”

    I recall writing about this related topic years ago in relative articles, using as an example: if you are wearing any sort of clothing carrying your corporate logo, or are driving an identifiable corporate vehicle, you always had better be on your best behaviour, including looks: your hair, your eyes, and yes, your shoes. (Certainly doesn’t mean expensive, but does mean well put together, and sparkling clean). You are “your” brand, but if you work for any corporation you are their (property) brand.

    Question: why do some REM stories present photos of article contributors sometimes of the sex-kitten variety with come-hither facial expressions? If those “branding” photos are supplied, it might be helpful if the topic got pointed out that perhaps the small cost of a professional (not Hollywood) business photo or even a good selfie might provide an opportunity for readers to take the writer’s real business seriously.

    There have been many books written on the topic, dress for success. But a recent REM comment post here at the company demise article spoke volumes when the posting commenter used the words:
    “Look at them… Do they look like they can disrupt anything?”

    (This posted comment written by an insider, may be supported by public interpretation.) I don’t say this to criticize, only to confirm its import.

    This is a perfect example of the topic herein. “Branding requires you look the part.” The picture chosen to head the REM article speaks volumes about body-language.

    The clothing might be designer label, but the stature says more. The group picture doesn’t say: efficient, crisp, attentive, effective, professional; it exudes: cocky, swagger, perhaps even laissez-faire. Sad, but true. Could be a dress-up of the dress-down often projected as the casual Silicon Valley tech world. Spread-sheets on the boardroom table might speak volumes.

    Is that reflected in the devastatingly sad results in the loss of in excess of 6m dollars? The public would question how could such a thing happen and no one noticed? Is this one of Canada’s largest investments in our industry to go upside-down?

    And then there is the article writer’s quote-paragraph nearly saying rules and regs are part of the problem, making it difficult to succeed in the real estate industry, quoted as having been stated by a named industry expert.

    And newspaper articles direct any questions to get put directly to the receiver or personal legal counsel not to the governing real estate council as would typically be noted.

    This all sounds a little like Wall Street in 2008, the Enron affair, and the current Wells Fargo undertaking. We hear and read of stories about the Cdn govt shutting down all wealth management departments at Cdn HSBC (described to me in some detail by a Raymond James counsellor) due to mismanagement of client funds. How is our industry any different? Is this situation if not the largest, one of the largest dollar volume missteps? It is genuinely sad.

    Even bankers no longer have what was once known as the “banker’s image,” now long-gone with the advent of dress-down Friday to becoming “the boss cannot tell me what to wear to work.”

    Bankers counter clerks now can wear flip flops and nearly beachwear while serving customers. To be expected of course in our industry if selling beach properties; less likely so, acting on behalf of urban buyers and sellers.

    No one is saying everyone should wear a shirt and tie, and certainly under the crown courtroom robes, there stands dishevelled bodies with maybe unpolished shoes that are connected to well-educated brains; but no one gets to “see.” No one gets to evaluate their expertise based on looks. A different kind of “brand.” Well-covered. And how you look shouldn’t predetermine your smarts or if you have any. But sadly, that is exactly what branding is all about.

    And this advice offered to Mireille definitely applies to men as much as to woman. It doesn’t matter if you are president of a corporation, or the shop foreman. A man or a woman (except woman are often judged more harshly in this regard). We know that news items topics of any given day often refer to what the story subject woman was wearing, whereas the same story doesn’t relate to men in the same manner.

    Mireiile’s mother’s advice is as sound today as it was when she, perhaps even unconsciously, prepared her daughter for a prestigious career path that cannot be denied.

    Here is a copy and paste from the particular interview, showcasing the advice that supported an outstanding career woman’s success:

    ===

    Mireille’s answer: “One thing I have learned in my career is, if you are not a brand, then you are a commodity and will not stand out from your peers. You need to be known for your unique qualities, the strengths and talents that make you different from the competition. This applies to all areas of your image—work quality, yes, but also behavior, manners, and style. All of these define your brand. And, though some people don’t like to hear this, looks count for women in business. A woman does not need to be gorgeous, but she does need to be put together and well-groomed. I’ve always remembered my mother’s advice that people notice your hair, your eyes and smile, then your shoes, and I’ve also learned to make sure I look presentable at all times. You never know when you will run into someone important, and you want to give the best possible impression of your brand.

    You can read the whole interview at:
    http://mireilleguiliano.com/content/iwomen-work-art-savoir-fairei-qa

    Respectfully
    Carolyne L 🍁

  2. The comment below is so telling ! Everyone should be thankful that there are rules and laws of real estate in place. It is like saying I could drive from point A to point B faster if I didn’t have stupid rules to follow. The result – crash and burn.

    “But “the difficulty with real estate in Canada is that you have to work within board regulations and you have to work within the rules of real estate. For that reason, there’s only a certain number of ways you can structure a real estate business.””

    • Google says that the writer of the quote you and I chose to refer to was the Senior Editor at MoneySense, and is not only a REALTOR(r) but a real estate expert….

      Copied at Google: “Romana King is an award winning personal finance writer, a real estate expert and speaker. Romana’s real estate and personal finance coverage can be found in her blog for MoneySense.ca, as well as Maclean’s, Canadian Business, Chatelaine,..”

      One can’t help but wonder why, as a Canadian REALTOR(r) she chose to use the “term” (word) ‘difficulty.’ When I first read the comment, I thought she was an American criticizing the Canadian system of rules and regs as being an obstacle to be overcome as to operating a successful real estate business in Canada.

      Can anyone define the meaning of the term “real estate expert?” And describe what exactly it takes to become one?

      Not criticizing. A sincere question. 38 years registered, (currently not practising due to family cancer situation), I in no way consider myself a real estate expert. There’s multiple facets to consider.

      It’s one thing to be a dominant name-brand local agent who specializes in a certain type of dwelling or demarcation such as waterfront properties and historical places, horse farms and dairy farms and know the difference, and quite another to be a writer, a speaker, a finance expert, among other titles attributed and attached to being a real estate agent. That’s one busy lady.

      The issue in the quote is the use of the word “difficulty.” Not implying, but stating, as though rules and regs are the cause of the downfall of this business or any other real estate business.

      Maybe you and I misinterpreted the quote? The writer of the REM article herein might be able to explain why he chose to use that particular quote.

      Cordially
      Carolyne L 🍁

      • Carolyne:

        The definition of the word “expert” is: Expert: That son-of-a-bitch from outa town.

        I know that I ain’t no expert, because I may be a son-of-a-bitch, but I ain’t from outa town.

        Brian

  3. Look at them. Never spent a day selling Real Estate and they thought they could disrupt the industry. Do they look like they can disrupt anything? Now go back to door knocking.

    • Hilarious!

      Skimming schemes only work if there is enough to skim off of the top. Turns out you can not skim off of the bottom.

      The only disruption that Organized Real Estate needs is to keep the few scum bags and numerous incompetents out. This means that there needs to be disruption of the puppy mill syndrome of the never-ending stream of waiting-to-fail newbies who constantly replenish the predictable flame-outs. Disruption needs to begin at the top of the ORE bureaucracy. Let’s replace TheRedPin name with ThePigPen name and attach it to the artificial intelligence at the top of the CREAcrat, OREcrat etc. bureaucracies, run by folks who have never been anything other than bureaucrats. How does a nine-to-five bureaucrat identify with a 24-7 seven-day-a-week commission chaser? Never the twain shall meet in the real world.

      ORE needs a clean-up/restoration crew, fore-armed and beginning with an institutional colostomy, followed by a barium flush. And by barium, I mean, bury ’em.

      (I spent a lot of time toning down my original thoughts/words so as not to challenge Jim-the-editor-guy to think “Should I deposit this B.M. crap into my special drawer of flammable materials?”)

  4. Too many people believe that technology is the ‘be all and end all’ of everything we do and nobody has to think for themselves anymore. That is why we have more fraud and more corruption in our society because everybody thinks they are smarter than the next guy, until they get caught??

  5. I recall in the late 80’s an Inman Conference in San Francisco where it was opined by numerous tech experts that the then current and still pretty much the same model for marketing residential real estate days were numbered and would soon be made obsolete by technology. My opinion at that time was that the buying and selling real estate had nothing to do with logic, is pure emotion and no one is going to buy a property they have not walked thru and got a feel for. Thirty years later, tech has created better video’s and time wasters…Thanks

  6. Ahh…Artificial Intelligence…(the downfall of reality)…with heavy emphasis on the “Artificial” aspect. I’ll take ‘real’ intelligence any day…and a living breathing face and body with a real, functioning, honest brain backing the system up.

    • AI, not unlike Orwell’s 1984, way far ahead of its time, that only now years later, is still not in nearly full gear, so many years later,

      AI is a concept way far ahead of its time. Several generations will yet have to die off before the world of AI becomes an everyday practice in real life, not just in the minds of tech whiz-brain folks.

      Paperless offices and cloud functioning reliability has no safety net. It’s sort of like putting a man on the moon. Only generations from now will the real facts unravel and perhaps have any real value. That’s not to say it isn’t there; it’s just not there, yet.

      There’s times when I wish I were younger; I’d volunteer to turn it around. But I’m not a good human babysitter. Always: you can lead a horse to water but you can’t make it drink.

      The paragraph quoted in the REM story… “But “the difficulty with real estate in Canada is that you have to work within board regulations and you have to work within the rules of real estate. For that reason, there’s only a certain number of ways you can structure a real estate business.”… Is puzzling indeed, as put forth by “a real estate specialist.”

      They always need of up dating and are in permanent motion. There’s always someone wanting to dismantle the rules and regs. And that might just speak volumes, Brian.

      Cognitive dissonance – sometimes an oxymoron. Programmed to self destruct or implode. Does that apply to AI?

      Carolyne L 🍁

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