In October of 2003, I was officially introduced to the real estate industry. I started my first post-college job at Realogy (it was named Cendant at the time, and has recently been rebranded as Anywhere). My first position at the company was as a sales coordinator for their real estate franchise group where I provided administrative support to the teams selling Century 21, Coldwell Banker, and ERA franchises. Over the six years that I worked for the company my job titles and responsibilities increased to include Manager of Technology, Director of Business Development, Assistant Vice President of Franchise Sales, and Vice President of Franchise Sales and Acquisitions. The entire experience was amazing and the various roles gave me a unique perspective which has been extremely valuable to me throughout my career. I owe a debt of gratitude to Anywhere for taking a chance on me.
Over the years, the company continues to evolve and grow. Anywhere has added brands that include Sotheby’s International Realty and Better Homes and Gardens Real Estate, and they recently started to franchise the Corcoran brand which they have owned since 2001. Additionally, they partnered with Home Partners of America to launch their iBuyer venture named RealSure, and they have made a series of additions to their leadership team. Their latest executive hire is Tony Kueh who became the first Chief Product Officer in the company’s history. Tony has been tasked with leading the Anywhere product strategy, innovation roadmap, and technology investments. He has had a long history of success with prior leadership roles at companies that include Microsoft, VMware, Qualcomm and SAP. Tony joins Anywhere at an exciting but challenging time for the real estate industry.
2021 was a record year for many companies in the residential real estate industry, but that momentum did not carry into 2022. Rising interest rates, coupled with other macro factors has created one of the most challenging markets we have seen in decades. Many real estate companies are reporting horrendous quarterly results, and stock prices for many of these companies are near all-time lows. Inventory remains extremely low, prices are dropping, and homes are sitting on the market far longer than they did last year. Additionally, due to the massive innovation that took place during the pandemic, and years of cheap financing, billions of dollars flowed into the real estate technology ecosystem. This created a slew of new competitors (with new models) focused on taking share from the industry titans like Anywhere. And even though many of these new companies are struggling with the changing market dynamics, the addition of new competitors continues to ratchet up the pressure on the existing market leaders.
Real estate is a people business, and the success of a company is directly related to the quality of customer service they deliver. Technology will never replace real estate agents, but it has become the central focus of brokerages and a critical component of differentiation for companies in this hyper-competitive industry. For example, an Anywhere competitor, Compass, raised $1.5B to fund their growth with a large chunk of those funds reportedly being used to build their end-to-end platform. Technology plays a huge role in how agents prospect and communicate with clients, the way in which properties are marketed, and the entire lifecycle of deals including sourcing, open houses, contract generation/signatures, mortgage, title, and just about every part of the process. The brokerage industry operates on razor thin margins, and the efficiencies that can be achieved with technology can make a huge impact on the financial health and sustainability of a company.
I was very fortunate to have the opportunity to sit down with Tony Kueh and ask him about his plans for this new role at Anywhere. His extensive background in overseeing Product for leading tech companies will be extremely valuable to Anywhere, but I also believe that the fact that he doesn’t come from the real estate industry is a huge plus. The massive changes in the industry require fresh thinking, and his strategy won’t be encumbered by approaching these challenges with old ways of thinking.
Below is our conversion:
In most industries, we have seen a tremendous amount of productivity gains with technology. Surprisingly, these gains don’t seem to have completely translated into the real estate industry. I’m sure it’s helped a little bit in terms of agent productivity and the amount of time an agent spends working on a transaction, but it hasn’t been transformative. Others have tried leveraging different models, but at the end of the day, they end up looking very much like a traditional real estate company. This lack of transformation has been the biggest surprise for me when I entered the real estate industry, but it is also very exciting because it provides an enormous opportunity for us.
The top priority is to formulate a strategy on where we want to place our bets. At Anywhere, we’re fortunate to be able to strategically invest in our technology, even in a challenging market. It’s important for us to determine how we invest in an efficient way to prioritize and then build for the future. Do we place our bets in either build or buy? Or which ones do we continue to partner on, and who do we select as our strategic partners that we will go big with? So in the near term, it’s really around the alignment of all that.
One analogy that I gave related to our multiple brand strategy is the iPhone. The same iPhone and iOS that is used by a high school kid is the same device and operating system that is used by a billionaire. So why does a billionaire need a different iPhone? They don’t. They use the same iPhone. They use the same iMessage app. They use the same Safari browser, and they use the same phone dialer. There’s a lot of intrinsically basic workflows that are involved in real estate that don’t really need differentiation. Now, we also believe that different brands have their own unique brand promise to the consumer, and we want to continue to fulfill these brand promises. As an example, digital solutions and Spanish language translations should be standard across all brands. However, for a more customized experience, it wouldn’t make sense for us to start doing VR/AR tours with all the brands right now since it’s probably more suited for a luxury experience. You will likely see us first deploy these solutions with our brands that focus primarily in the luxury market, but over time as the technology becomes more pervasive and common, we will start to embed these solutions into everyone’s experience.
We already have a meaningful investment in data, but we want to continue to accelerate it. First and foremost, we do promise and need to reiterate that the data our affiliated agent network provides us is their data. We act as a custodian of this data and we treat it as such. Therefore, there are limits to what we can and cannot do. The solutions that we have in our roadmap will certainly encourage the agents to share their data with us so that we can give them a direct benefit. By aggregating data, we can provide agents with additional insight and better analytics to help them continue to be more successful.
For instance, we will begin using intelligent analytics and machine learning data mining to drive significant value for our franchisees and agent network. In aggregate, I think we have a tremendous amount of opportunity with data, and this is probably one of our biggest upsides.
In the tech world, there is always a preference to build. Then, if you’re behind on building a particular solution, you typically buy. Partnering is more around an ongoing strategy for when you need a specific capability, so you generally do not see many large strategic partners in tech companies. In our world, I think we must be more surgical. While our technology investment is a healthy percentage of revenue, we’re still a fraction of what a typical tech company has. For example, companies like Google, Amazon, and Microsoft, spend 15% to 20% of their revenue building and acquiring tech. And they have a massive revenue footprint so they can be much more aggressive with their spending. At Anywhere, we need to be a lot more surgical about exactly what we buy and build versus partnering when it comes to the things that are fundamentally core to our business. Going forward, we’re going to make it very clear to our partner ecosystem what our plans are in terms of buy versus build, so that we can also have a fairly healthy relationship with our partners. The worst thing you can do is to partner with somebody just to learn about the space without ever disclosing the intent. I think that just makes for a bad partnership. So we’ve been pretty clear with our partners in terms of our intent, and what our long term plans are.
I would say that we really have one customer, and two sets of partners. There is only one person that can trigger the flow of money, and that is the consumer. If the consumer doesn’t buy or the consumer doesn’t sell, there is no money to be made for the agent, or the franchisees, or us. The franchisees (clients on a different scale, of course) and their agents are ultimately our strategic partners. They deliver the value proposition using the brand, the tools, the services, and the education needed for a successful transaction. From this perspective, it is important that we make sure that our incentives are aligned to ensure that the consumer gets exactly what they are looking for. As a seller, the goal of the franchisee, the agent, and Anywhere is to maximize the value of their home, to adhere to the timeframe that they are looking to sell, and give them the best advice on how to handle perhaps one of the highest valuable assets they will sell during their lifetime. For a buyer, the goal of Anywhere, the franchisee, and the agent is to make sure that they have full access to all available inventory in their price range and geography, that they get the best terms possible, and that they are educated on all the ancillary services they need to consummate the transaction such as mortgage, insurance, legal services, and title.
We also need to effectively invest in terms of real estate transactions to make sure that we, through our franchisees and their agents, deliver the highest value and the strongest value proposition to consumers. Once incentives have been aligned, this is the most important focus of ours, and it’s really about understanding the types of technology and support that our franchisees and their agents need to run an effective business. We continuously ask ourselves what our agents need to make sure they get the best engagement with a consumer. These are things that we have traditionally done fairly well, and we will continue to deliver value to our agents so that they are armed with the best solutions available on the market.
Everyone’s looking to build an end-to-end platform because it’s so core to the business. The challenge is, just as you mentioned in your question, that the industry is extremely fragmented and that makes the goal of building a platform like this incredibly challenging. If an independent startup was to go and try to build it, they would literally spend their existence trying to solve that problem and they probably would not get very far. Organizing all the disparate data sources is just the baseline, and then the startup would need to build value on top of it. I do believe that building an end-to-end platform is achievable, but it can only be achieved with scale. I don’t think that you’re going to see a startup with $5 million of seed money get very far due to all the complexities. I have been looking hard at the question of whether or not we should build an end-to-end platform, and I think that everyone needs to look at it from a perspective of, “is this the thing that they want to own, or is there a partner out there that can deliver this for us?” And if there is a partner, do they align with the long term, strategic direction of the company. I don’t have a conclusion right now, but my inclination is similar to many other people in the industry in that I think that we should go build this. However, since it is a very meaningful capital investment, if we come across an alternative way to achieving the goal, we would certainly be open to exploring it.
If you look at the real estate industry today, younger millennials and Gen Z’ers represent the highest pent-up demand of first-time homebuyers. COVID has gotten them to focus on the importance of home. These are the 20 somethings that used to go out every night and their home was just a place to sleep. That is no longer the case. Most of them haven’t bought a home because they are waiting for the prices to continue to correct and come down. To me, the most exciting thing about the industry is that I anticipate that we will come out of this tougher environment with some very meaningful tailwinds driven by first-time homebuyers.
I must admit that I was extremely impressed with Tony. For someone who has been in the industry for only a matter of weeks, he has a strong fundamental understanding of the challenges, opportunities, and complexities of the real estate industry. At the end of our conversation, Tony asked if we could reconvene for a conversation in 3 to 4 months, after he has had more time to settle into the role, as he realized that his view on many of these topics may change as he spends more time in the weeds. You can guarantee that I am going to take him up on his offer. I will always have a soft spot for Anywhere for taking a chance on me right out of college, and I can honestly say that I am confident in the company’s future knowing that Tony will be leading product strategy and innovation for the firm.
I am very exited to be participating in the Commercial Observer’s Future Forward event in Los Angeles on December 6th.
I will be on the panel titled: Looking at the Long Game: Top Tech Future-Proofing Real Estate Portfolios – along with Kevin Danehy (Vice Chairman: Willow) and Adrian Foley (President and CEO: Brookfield Properties Development). If you are interested in attending, please find all of the information at this link.