The Allure of Conquest

Oct 30, 2015 Michael Wurzer

Rob Hahn replied to my post about RESO and Universal Property IDs by suggesting:

If the existence of “so many different property data sources” is the problem, the solution could be eliminating all the different property data sources. Screw collaboration; conquer them instead. And then, once conquest is done or at least well underway, whoever is the winner can come out with — you guessed it — the Universal Property ID which is identical to the Property ID they’re already using.

This idea of a single-source, all-encompassing property database is an alluring mirage. Worse, it’s a mirage that ignores or distracts from the opportunity to create something better, the win-win I discussed in my post and which Rob apparently doesn’t believe is possible.

First, the mirage of conquest. As I said in my first post on this topic, “As the web itself proved long ago, the creation of data by humanity far outstrips our ability to centralize it and so the best we can do is figure out how to link it together.” No matter how alluring the concept of centralization and conquest is, the reality is that data always has been, and is now more than ever, created in a de-centralized way. The most effective method of harnessing data ever invented so far is the world wide web, which provides methods for linking disparate sources of data together.

Rob thinks I wrote the post about Universal Property IDs because, as an MLS vendor, I’m nervous that RPR MLS will take over the entire industry and become a “Data Borg” eliminating the need for anything else. This misses the main point. I’m not worried about competition but I am worried about the lack of it. I’m worried that instead of focusing on creating an environment to foster competition and innovation, the industry might be seduced by the mirage of a monopoly. The history of market economics has proven quite unequivocally that fostering competition results in long-term growth and prosperity, and that monopoly and centralized control result in stagnation and, potentially, death.

Policy decisions at the cooperative level (governments and even trade associations like the NAR, RESO, and others) can have a huge impact on competition and so the industry needs policies that encourage competition, not reduce it. That’s why I’ve long been passionate about RESO, because standards enable competition. This is the genius and beauty of standards, like HTML, HTTP, and RESO. Standards, when well-crafted, enable and even encourage competition, creation, and innovation, instead of inhibiting it.

Importantly, however, standards only work when they’re adopted and adoption is a long process that’s really just starting in our industry. My fear is that the long road to standard adoption makes the mirage of a monopoly solution even more palpable and attractive. A monopoly would be bad, and so that’s why it’s important that the standards process work. (If you want to know what I mean by “bad,” check out Rob’s ultimate conclusion in one of his comments to his post, where he posits the result of his conquest approach is a regulated monopoly. I’m not 100% sure if he’s being tongue-in-cheek with that comment, but a regulated monopoly is about the worst outcome I can imagine.)

Second, let me briefly address how the mirage of conquest can distract from the opportunity to create something greater. Rob argues that the real estate business is entirely a zero-sum game and so nothing will be added by a Universal Property ID or other cooperative efforts. I think this is wrong on a few fronts. First, if the data available can be improved (more accurate, complete, etc.), that can reduce risk and costs, both of which can increase the number of transactions overall (lower risk and costs, even incrementally, make transactions possible that previously were not). Second, more generally, increasing competition will result in more innovation, and that innovation can create new, bigger and more efficient markets, which means it’s not always a zero-sum game.