Last week (which seems an eternity ago), I posted about Clay Shirky’s article called A Group Is Its Own Worst Enemy and how the principles discussed apply directly to MLS in this web world. I said then that “I truly believe this is the framework for reinventing the constitutions of the MLSs” and I believe that statement even more now than I did last week in the rush of reading the article and writing my post.
To back up my statement, I intend to delve into the Shirky principles for developing social software in more detail in several posts, starting with this one. Shirky lists four issues you need to design for in social software, and I’d like to focus on the first two:
These two things seem to me to be very related. The user can invest in their “handle” (who they are on the system) if their good works get recognized. These two things combine to create a reputation.
Historically, in the MLS, reputation has centered on sales statistics, which certainly are important, but limited, as Mark Twain so aptly described. If you slice and dice the sales stats enough, everybody with even one sale is number one somewhere for some market. (Which might be one reason MLSs often don’t allow members to run system-wide sales rankings; that, and the myth that brokers will use such stats (as if they don’t have them anyway) to poach the best agents.)
Also, are sales statistics the only “good work” in real estate? The idea of teams has put that question into high relief recently, as team members each bring their talents to the equation. Of course, team sales are the ultimate objective, but how do you slice and dice those stats for the individual team members?
I would suggest that MLS social systems could benefit greatly from expanding the good works of real estate beyond sales to any content created in the system. Athol Kay keeps his blog running with the Bad MLS Photo of the Day. Could there be a virtuous cycle created by allowing agents to promote their photos better in the system? How about photo ratings within the MLS, creating reputations around excellent photos? Or how about the best CMAs? Or the most knowledge about a particular neighborhood? Or the buyer’s agent with the most prospects? Or the best blogs?
The bottom line is that there are many types of content added to the MLS system all the time that are never tracked or promoted as they could be. The “hot sheet” in the MLS could become a lot hotter if some of these additional good works were better promoted and allowed the members to garner reputations around them. This could lead to more segmentation of services and allow agents to focus on particular talents as opposed to only rewarding the ultimate sale. In turn, that could raise the professionalism of the MLS members as a whole. Okay, maybe that’s going a little far, but, again, there’s a seed here, I think, and it needs growing.
I’m so glad to be coming to the weekend. What a week! Monday we flew to give a final presentation to a prospective client on Tuesday and then flew right back for our client Summit Wednesday and Thursday. We had over 75 people attend this year and I thought the meetings were very productive as we learned a lot from our clients about our next release coming October/November. I’m excited to start putting all that feedback to work in the coming weeks, but, after four straight 18 hour days, I’m ready for the weekend and spending some time with my family. I hope all of you have a great weekend, too!
If you’re interested in MLS and want to see where MLS crosses into web 2.0, you must read A Group Is Its Own Worst Enemy by Clay Shirky. The article itself never mentions MLS but that doesn’t matter. This article is all about MLS and the reasons it succeeds and how it may change in the face of the current challenges from web technology. Reading the article in its entirety is critically important, but, to help ensure that you do read it, here are a few quotes that support my claim of relevance to MLS:
[H]umans are fundamentally individual, and also fundamentally social. Every one of us has a kind of rational decision-making mind where we can assess what’s going on and make decisions and act on them. And we are all also able to enter viscerally into emotional bonds with other groups of people that transcend the intellectual aspects of the individual.
. . .
So these are human patterns that have shown up on the Internet, not because of the software, but because it’s being used by humans. Bion has identified this possibility of groups sandbagging their sophisticated goals with these basic urges. And what he finally came to, in analyzing this tension, is that group structure is necessary. Robert’s Rules of Order are necessary. Constitutions are necessary. Norms, rituals, laws, the whole list of ways that we say, out of the universe of possible behaviors, we’re going to draw a relatively small circle around the acceptable ones.
He said the group structure is necessary to defend the group from itself. Group structure exists to keep a group on target, on track, on message, on charter, whatever. To keep a group focused on its own sophisticated goals and to keep a group from sliding into these basic patterns. Group structure defends the group from the action of its own members.
. . .
People who work on social software are closer in spirit to economists and political scientists than they are to people making compilers. They both look like programming, but when you’re dealing with groups of people as one of your run-time phenomena, that is an incredibly different practice. In the political realm, we would call these kinds of crises a constitutional crisis. It’s what happens when the tension between the individual and the group, and the rights and responsibilities of individuals and groups, gets so serious that something has to be done.
And the worst crisis is the first crisis, because it’s not just “We need to have some rules.” It’s also “We need to have some rules for making some rules.” And this is what we see over and over again in large and long-lived social software systems. Constitutions are a necessary component of large, long-lived, heterogenous groups.
Maybe I’m so pumped up about this article because this is essentially what I wrote in MLS Is More Than Technology. To cooperate, competitors need rules for engagement and that’s what the MLS does. I can’t tell you how many times I’ve said to someone, “The one thing I don’t like about the MLS industry is the politics.” I’ll never say that again. MLS is politics! MLS is the rules of the road or Robert’s Rules of Order or whatever you want to call it. That’s what makes it last.
Now, the second part of Mr. Shirky’s article is even more interesting, as it explains how social software is bringing these group dynamics into the fore:
If these things I’m saying have happened so often before, have been happening and been documented and we’ve got psychological literature that predates the Internet, what’s going on now that makes this important?
I can’t tell you precisely why, but observationally there is a revolution in social software going on. The number of people writing tools to support or enhance group collaboration or communication is astonishing.
. . .
We’ve had things like mailing lists and BBSes for a long time, and more recently we’ve had IM, we’ve had these various patterns. And now, all of a sudden, these things are popping up. We’ve gotten weblogs and wikis, and I think, even more importantly, we’re getting platform stuff. We’re getting RSS. We’re getting shared Flash objects. We’re getting ways to quickly build on top of some infrastructure we can take for granted, that lets us try new things very rapidly.
. . .
When you got social software on the web in the mid-Nineties, a lot of it was: “This is the Giant Lotus Dreadnought, now with New Lightweight Web Interface!” It never felt like the web. It felt like this hulking thing with a little, you know, “Here’s some icons. Don’t look behind the curtain.”
A weblog is web-native. It’s the web all the way in. A wiki is a web-native way of hosting collaboration. It’s lightweight, it’s loosely coupled, it’s easy to extend, it’s easy to break down. And it’s not just the surface, like oh, you can just do things in a form. It assumes http is transport. It assumes markup in the coding. RSS is a web-native way of doing syndication. So we’re taking all of these tools and we’re extending them in a way that lets us build new things really quickly.
Wow, this blew me away! All “web MLS” systems to date are just like the Giant Lotus Dreadnought, they look like the web but they aren’t. But why is this? The technology? Nope. It’s the politics! (And I don’t mean that pejoratively, any more.) Why aren’t web MLS systems truly web creatures, allowing for easy exchange of data every which way and that? Because the group rules don’t allow it. Why don’t the rules allow it? Because the group would cease to exist without them!
This is not to say that the rules won’t change or that MLS won’t or can’t become truly web centric. I think that’s happening right now. But nobody, be it NAR or Zillow or Point2 or anyone else has figured this out yet. Nobody. Who are the social software engineers who are going to figure this out? My bet is on the brokers, agents and MLS executives that contribute their time and talents now to the MLS. This is their challenge. We’re here to partner with them in that challenge. (What an awesome way to enter our annual client Summit, clearly defining such a huge challenge to share with our customers!)
Fortunately, Mr. Shirky goes even further and outlines his patterns for success in social software. First, there are three things to accept:
While Shirky says the above three things are givens and will not change, the following four items can be designed for and adjusted:
I truly believe this is the framework for reinventing the constitutions of the MLSs. The seeds are here. We need to grow them. Now.
This is the week we hold our annual FBS Summit. The Summit is an opportunity for us to share with our clients our product development plans and learn from them whether those plans make sense. We have about 75 people coming from all over the country this year, so it’s bound to be a fun and exciting event.
Incredibly, on top of that, a few of us are heading off today for the final presentation tomorrow to a potential new client, and then we’re going to rush back to try to make the tail end of the opening reception for the Summit. We tried like crazy to get the schedule adjusted but it just wasn’t going to happen. So, I’m crossing my fingers, toes and everything else for good weather and no travel delays today or tomorrow, so we make it back safe and on-time for the Summit.
My hope is to blog about the Summit this week and maybe even get one or two guest bloggers to join in the fun.
Google just announced that they are committing $4.6 billion to the auction of wireless spectrum to be conducted by the U.S. federal government. The stated reason? To encourage the FCC to adopt what Google considers to be some consumer friendly requirements into the auction process. Basically, Google wants to ensure that whoever wins the bid(s) for this spectrum keeps the network “open”.
I’m not writing about this to comment on whether Google’s policy is right or wrong, or whether it is a broad strategic move to strengthen their position on a variety of fronts (undoubtedly it is), even though Google positions it as simply protecting the consumer. My reason for writing is simple: This is an incredible example of the power of success. Google built a better mousetrap and now has billions of dollars to wield. That’s power.
Our little company has been relatively successful the last few years, too, and it’s amazing to me what a difference having cash does to decision making. Basically, having cash gives you the ability to make fast decisions. You don’t have to sit around wondering how you’ll finance the decision, you just do it. Of course, that’s sometimes good and sometimes bad, but mostly it’s good, because cash allows you to dream and do. That’s what Google is doing now and why they’re likely to be very, very successful in the years and decades to come.
There’s been quite a stir the last few days about the lawsuit pending against Facebook by ConnectU. For those not (yet) interested in social networking, Facebook is a wildly popular web site with a young CEO named Mark Zuckerberg, who is said to have turned down an offer of $1 billion for Facebook from Yahoo! and now there are rumors of a potential +$4 billion payday from Google or Microsoft. Amidst all this is the claim by ConnectU that Mr. Zuckerberg stole their code to start Facebook.
What’s most interesting to me about this is that several bloggers are suggesting the ConnectU folks are just whiners who couldn’t execute, whereas Facebook did. On the one hand, this argument resonates with my belief that software patents (protection of ideas) are unnecessary and stifling of innovation. On the other hand, the Facebook case seems to go further than mere protection of an idea, to copying source code. That’s execution of a different sort, and not one that’s going to get my vote.
Software is filled with stories of one company capitalizing on the ideas of another. Xerox Parc has made fortunes for Apple and Microsoft, who were able to execute where Xerox was not. Ideas are meant to foster new ideas; that’s the essence of innovation. But that doesn’t mean people should be able to copy source code with impunity, too. That’s neither innovation or execution and, if proven, will pose a very serious problem for Facebook.
This is the third in a series of posts about negotiating software license contracts, initiated by our mistakes with GeoJet. The first post explained why it’s important to plan up front for short-term extensions at the end of the contract in the event you need time to transition to other software. The second post suggested an alternative to one-sided jurisdiction provisions. In this post, I’ll take on arbitration clauses, a favorite of the ’80s but not a good idea today.
A lot of template contracts will contain a provision that requires that disputes be resolved through arbitration instead of or at least before going to court. The theory is that courts are too time-consuming and expensive, so some alternative is necessary. Arbitration is said to be less expensive and quicker, because the rules for discovery (where you get to ask the other side questions before the trial or hearing begins) and evidence are less burdensome and you can hire private judges with better schedules for your needs.
The problem is that the different rules create a lot of unpredictability and so, over the years, more and more rules have been added to the arbitration process, such that it now is often just as complex and expensive as litigation. At the same time, differences remain in the rules and so the results of arbitration are often dictated by the arbitration panel more than the evidence. For this reason, when I was practicing law, we often joked that the “arb” in arbitration stood for arbitrary.
For these reasons, I always try to avoid arbitration provisions in software license contract swhenever possible. Instead, I recommend that the contract require mediation first, and then, if that fails, go directly to court. Mediation is basically where an independent third party is brought into the picture to try to help the parties find a middle ground to resolve the dispute. If that fails, though, there is little point to fussing around with arbitration, which will just waste time and money. Instead, let the parties slug it out in court and hope the threat of the expenses brings everyone to their senses so they can resolve the dispute early.
If you find yourself forced into an arbitration provision, at least try to make sure that the arbitration panel selected has expertise in both software law and software creation, if possible. These are both specialized areas and the result of the arbitration will be much better with experts in the subject matter.
SoCalMLS, one of the largest MLSs in the country, announced today that it was removing days on market numbers from public/client reports. The data will still be on the agent reports, along with links to the detailed history, which “gives you a much more precise overview of what transpired for a particular listing.” This approach of focusing on the detailed history is basically the same suggestion I made a month or so ago, because there are simply too many different ways to interpret the data. Instead of taking away data from the consumer report, I would suggest adding more details from the history to inform the days on market or allow the consumer to judge for themselves.
There’s lots of discussion and confusion regarding NAR’s Gateway proposal. Is it an MLS or not? Whoops, there’s the first mistake. What’s an MLS? Clearly, the MLS is more than just the software that tracks the listing data, but the Gateway isn’t concerned with that, so I think it’s safe to qualify the dicsussion to MLS systems. But what’s an MLS system?
For this discussion, I think there are three major parts to an MLS system, the back, middle and front. The back-end is where the listing data and images are stored. The middle is where the business logic typically is stored. The front-end is what the end-user sees, typically through a browser of some sort.
Part of the confusion regarding whether the Gateway is going to replace the current MLS systems or not stems from the lack of distinction among these three core components to an MLS system. When the Gateway is mentioned as a replacement of the MLS, the whole enchilada is involved, front, back and middle. This expression of the vision entails a new web site that all agents would use for entering listings, CMAs, prospecting, and everything else MLS members do today with their MLS systems. People enamored with this vision see sites like Zillow and think it’s not far from what they might need for an MLS and so NAR, with all that member money, should be able to whip something up like it in no time, particularly since Move already has Realtor.com, Top Producer, etc., under their belt. Knocking off the MLS space should be a cinch. Well, that’s the theory anwyay, but I don’t think I’m going too far out on a limb to say that vision is long-term, at best. So, for now, we’ll give that the Warren Koeller chuckle and move on.
When proponents of the Gateway say that it won’t replace the MLS, they mean that it won’t replace the front-end, at least right away. In at least one vision, the back-end will be a RETS server capable of being accessed by any RETS-capable front-end. In this scenario, the local MLSs may continue to play a role in providing this front-end to their members, but the back-end will be one big data repository of all the listings, images, tax records and more.
Now here is where it gets interesting, and where I think the Gateway proposal may be flawed, fatally. First, when one software vendor creates the front-end and another creates the back-end (even a standardized back-end), you quickly end up with data in more than one place. The front-end vendor works with their clients to provide them with a competitive advantage, something new. Yet the repository is common for everyone. So, to create that advantage, they start adding data locally, accessible only to that front-end or the users of that front-end.
Here’s a simple example. Let’s say a repository is created and, as is common of big repositories, sets a limit on the number and size of photos that can be stored for each listing. Some clever software vendor will come along and create a system to allow users to store an unlimited number of high-resolution photos. Or perhaps the repository doesn’t allow for storage of listing flyers or large remarks fields or some key data field needed for a particular area. That need will get filled. But the result is that all of a sudden all of the data is no longer in the repository. Hmmmm. What was the point of the Gateway again?
I’ve written about this before, regarding Zillow, but the same analysis applies to the NAR’s Gateway proposal. The idea that all the data can be stored in a single repository is flawed. It will never happen, because there will always be some agent somewhere who wants to differentiate their service and they’ll start collecting data outside the repository. That’s what innovation and competition does, it differentiates. (This not to say that a national repository of core listing data isn’t useful. In fact, I’ve previously suggested that a distributed national repository could be very valuable and could foster competition instead of inhibit it.)
More important than content created by agents, however, is all the content related to properties created by others outside of the real estate sales industry. Every day, new information is being created and the creation of a repository won’t harness that creativity. Home owners, neighbors and more will create valuable information about specific properties. How do we harness that information?
Back to standards, this time highly focused. We need standards for identifying properties. With a reliable standard adopted widely, content created anywhere could be linked together simply by properly identifying the property. All the current systems (address, parcel number, latitude/longitude) have challenges. We need a reliable standard. Working to establish standards is something that large organizations like NAR can excel at where individual competition often cannot. Moreover, a reliable property identification system really is a necessary pre-cursor to a gateway of any kind. But, ironically, with a reliable property identification system, a gateway likely isn’t needed.
Earlier this week, I posted about our woes in dealing with GeoJet at the end of our contract, and that has given me the idea of doing a short series of posts on this topic. I’ve negotiated our MLS software license with over 100 different MLSs and I’ve been told consistently that our contract is one of the easiest to understand and negotiate that they’ve experienced.
Part of the ease of negotiating, I suspect. is that I do it myself and so have authority to modify the contract, without having to go through a long bureaucratic process. Also contributing, however, is the fact that our core contract is only eight pages long and the exhibits add another five pages. It’s simply easier to understand and negotiate a shorer contract.
Most importantly, however, is that, as we’ve learned from past negotiations, we modify our base contract to adjust to the most common result. I think this is unusual. Most companies simply keep battling over the same provisions, over and over again, or employ a take it or leave it approach, but that doesn’t make sense to me.
For example, previously, our base contract required that any litigation over the contract occur in our home state of North Dakota. This is called a jurisdiction provision and is very common. However, this provision was challenged every time by clients, wanting jurisdiction in their home state. With many attorneys, this provision was a battle royale; they simply had to have it their way, which usually made me dig my heels in even more, too.
Some time ago, however, I was negotiating this provision and the other side suggested that jurisdiction favor the defendant. In other words, whoever is bringing the suit has to do it in the other’s home court. Brilliant! A provision that discourages litigation and is balanced for both parties. Ever since that negotiation, we now include it as part of our standard contract. Why battle over a provision that has a good, well-balanced solution?
Next up, we’ll talk about arbitration provisions, and why I hate them.
