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Tribus Cometh: Gehenna or Anarch Revolt?

March 26, 2009
I have come to hunt the antitribu!

I have come to hunt the antitribu!

At the recent RE Tech South conference, I had the opportunity to meet Eric Stegemann — a self-described 25-year old going on 40 — who is the founder and CEO of a company called Tribus as well as the “Head Honcho” of River City Real Estate, a brokerage in St. Louis.

Eric is really one of the brightest guys in the next generation — the Millenials — with a singleminded focus on real estate, technology, and improving the former with the latter.  That he makes terrible drinks (some sort of Cherry-Nyquil tasting concoction with a bitter aftertaste) really can’t be held against him.  He’s 25-going-on-40; he’ll learn by 30 to savor the mysteries of fine cognac and single malt scotch.

In any event, Eric and I got into conversation and it turned out to be tres interessant.  It appears that Tribus is the “un-Franchise” that aims to eradicate the big real estate brands from the industry.  The idea essentially is to offer brokers and agents everything they need to operate a real estate brokerage, except for the brand itself and any rules associated with the brand.  So, for example, Tribus will give its “affiliates” a CRM system, a listings distribution system, a website, social media tools, accounting package, and so on.  But there won’t be a brand like “Century 21” or “Keller Williams”, and no brand identity guidelines.  Nor will there be service standards at the Tribus level or any such thing.

Eric believes that the value of these franchises lies in the backend systems and tools, and not in the brand.  In fact, he believes that entrepreneurial broker-owners want the freedom to run their business as they see fit, without the baggage that national brand franchises impose on them.  They, however, want the support of a national entity for technology and backend processing.  So Tribus will provide everything the broker-owners want, and nothing they don’t want, and charge anywhere from 3% – 6% of GCI for those services.

<Geek Detour>

In the World of Darkness fantasy setting, published by White Wolf, an antitribu is a vampire (or Kindred, or Cainite) who has turned against his clan.  Since Eric’s company’s name is Tribus, the notion of Anti-Tribus comes naturally to mind if one wishes to poke holes in the concept.  But then, that leads to the thought that either Tribus will bring about the end of real estate as we know it (Gehenna = end of the world) or that Tribus is just another rebellion against the existing power structures (another Anarch Revolt).

</Geek Detour>

The Argument for Gehenna

Eric Stegemann makes the argument that Tribus will bring forth Gehenna.  It goes something like this:

  • Real estate brands are meaningless — just ask any consumer to name the brokerage brand she used to buy or sell their last house.
  • Big Brands are clueless — look at how slowly the various big franchise brands have moved to embrace the most basic tools, such as blogs and Twitter.
  • Entrepreneurs want support, not rules; they want to be set free, not controlled by Corporate HQ.

So, if Eric is right, then legions of companies and agents will be signing up with Tribus, flipping the bird to the likes of RE/MAX and Coldwell Banker and such, and those imprisoned by the chains of the Methuselahs of real estate will sign with Tribus once their multi-year affiliate agreements end.

That does represent Gehenna, yes.  Basically, it means a world without big real estate brands.  Regional brands and individual broker brands may survive, but even that may or may not be the case, depending on whether Tribus will work directly with agents or not.

National advertising will more or less vanish, replaced by the sort of late-night cable TV ads of the variety we’re used to from personal injury lawyers.  Consumers will relate directly with an individual professional — as they do today (more or less) with attorneys.

And I do think the legal industry is an excellent analogue for what the future of real estate might look like.  Retail law (analogous to residential real estate) is completely different from corporate law (analogous to commercial real estate).  One might say the two aren’t even same industries.

Retail law is more or less impossible without the support system that technology and data companies — like Lexis and Westlaw — provide.  Corporate law benefits from those tools, but with their enormous in-house support structure, leverage those tools in very different ways.

Caitiffs are running wild, Justicar

Caitiffs are running wild, Justicar

The Antitribu Argument: A Minor Revolt, At Best

On the other hand, the anti-Tribus argument can be made as well:

  • Brands are far from meaningless simply by the power of recognition.
  • Big brands are far from clueless, and one should not mistake the lack of action with the lack of intent.
  • The economics of technology industry favors those with big pockets.  CRM might be everywhere in the age of, but big enterprises have had CRM for a decade while small/mid-size businesses dreamed of the functionality.
  • Agents and brokers might leave established big brands for a fling with Tribus, but ultimately will return once the Big Brands start delivering value.

Anyone can offer some nifty widget or tool; but not everyone has a brand with 90+% recognition.  The impact of that on even something like SEO is enormous.  A study I can’t locate (and don’t have time to look-up right now) showed that branded links get clicked on far more often in Google search results than unbranded links.  Given the choice between “Century 21” and “Joe’s Realty” in the search results list, consumers go for the brand they had heard of.

Furthermore, Big Brands aren’t dead; they’re just trying to figure things out.  Whatever Tribus can offer, any Big Brand can replicate and improve on in a matter of months, if not weeks.

So yes, a few fringe brokerages and agents may be seduced by the Tribus message.  But really, it’s a minor revolt of the anarchs and caitiffs, rather than Gehenna when the antediluvians will awaken.

In The Meantime, Back At Consumer-ville

Some of this theory, of course, is completely irrelevant.  I’ve been interviewing random consumers for the past couple of weeks (and have a ton of video to go through and edit) and some of the insights are… shall we say… illuminating.

Consequences of Ignorance

Consequences of Ignorance

It isn’t clear to me that brand doesn’t matter to consumers, although not one mentioned a Big Brand or a Big Brand website in their course of search.  They reason I say brand might still matter is that they do appear to care quite a lot about brand when it comes to things like banks and hospitals.  They’re not particularly thrilled about locations where a known bank branch doesn’t exist, or where the only medical facility is some small, unknown clinic.

Consumers clearly measure agents by the information they can provide, and virtually every consumer I’ve spoken to so far is unhappy with what their realtors provide.

So whether it’s Tribus (or similar independent support/services provider) or it’s the Big Brands themselves who have to provide the tools and support that realtors need to service consumers better is, at the end of the day, immaterial.  It’s the sort of inside-baseball stuff that industry folks care deeply about, and the consumers care not at all.

That is, in the final analysis, not good news for Big Brands — or even regional brands or small brokerage brands.  Consumers don’t know you, don’t benefit from you and the services you provide, and associate nothing with you.  Big Brands have left a vaccuum in the landscape.

My take on the situation is that Tribus represents a minor rebellion — an anarch revolt that the Big Brands of the camarilla can put down with relative ease.  But left alone, if the Big Brands do not wake from torpor quickly and start taking steps, they may find that Gehenna is upon them after all.


9 Comments leave one →
  1. March 26, 2009 5:51 pm

    Big brokerage fan I am not (obviously. If you know me, you know I left C21 to form my own independent brokerage).

    But “3 – 6%” for only the back end? I paid C21 6% and got back end and the brand and. Now granted, the value of the brand is debatable, but 6% for back-end only seems on the high side, and I suspect (but don’t know for fact) that I wouldn’t have the sales volume to garner the 3% rate (assuming again the percentage is on some sort of sliding scale. I should probably just follow the links…)

    It’s most interesting, as the thought of sticking a fork in the big-box brokerages is quite entertaining. I’d have to see more, a LOT more, to determine if it was worth 6% of my GCI. I don’t need a website, or social media tools, or an accounting package or a listing distribution system. I have those. It better be one hell of a CRM for 6%… and actually, I have a CRM, I just suck at using it.

  2. March 26, 2009 7:03 pm

    I’m heading into a meeting so Rob I’ll tackle your argument in a second. What’s ironic is I think you make my argument, but come back and just say that I’m wrong only if the big brokers wise up.

    You have the tools, you’d be shocked by the brokers that do not! Brokers with hundreds of agents. Or shhhh! Even brokers that are franchises have been asking me if they can use our product.

    But our target company is one that wants to operate on it’s own without the branding, but wants the support. (We offer a lot more than what Rob mentioned by the way including an accounting system designed for brokerages from the ground up instead of jerry rigging PeachTree or QuickBooks.) But one of the big keys to what we offer is brokers the ability to only pay when deals are closed. IN tough markets it’s a lot easier to send a check for 5% of GCI than it is to send in $1500 or more every month regardless of if a deal closes or not.

    One item not mentioned that we offer too is training and support. If your agent has a problem with something, they call us, not you. We offer weekly trainings on topics like using social media or video to sell real estate. (Again things that Jay is very well versed in, but most brokers are not.)

    But what you said is that you suck at using it, the final piece is helping you use it, training you on getting every ounce of functionality out of it. And our system being one time data entry. You enter a client once, and it flows through everything you do even down through the accounting system….

    • March 27, 2009 3:30 am

      Eric –

      All I can say at this moment is that at least at Leading RE show, there are some MONSTER brokers who get it. They really do. And they’re putting stuff in now (and have been for a while) that will kick the crap out of anything available in the “public domain” if you will.

      Doesn’t mean you can’t succeed; but right now, I’m leaning against Gehenna scenario.


  3. March 26, 2009 10:39 pm

    Eric – I agree completely that there are a LOT of brokers out there without a clue. A whole lot. From the limited amount I’ve read on your site, you do offer a great deal of “stuff”. For me personally, I’m not sure it’d be worth it, but I’m a very small brokerage with a very much hand selected set of agents.

    Now, should I decide to expand significantly, what you’re offering may just be very enticing. And clearly it’s what many out there need.

    I wish you all the best with it!

  4. March 27, 2009 3:11 am

    Great post and interesting business model.
    @eric: good luck!

  5. March 27, 2009 11:15 am

    @Magnus – Thank you!

    @Jay Thank you as well! I look forward to meeting with you at an event in the near future. Still trying to decide between PHX and Portland for REBC.

    First of all I’d like to know when you say “Monster Brokers” do you mean national brands, or franchisees? Just wondering.

    (by the way, just because our product is a collection of publicly available products now doesn’t mean it will be always that way. I’ve got developers working on a few tricks right now. Plus we’re getting ready to roll out a business plan for brokers to use that allows them to have almost no office whatsoever and their brokers are able to write contracts and handle everything in the field.)

    However, look at the financial services industry. Sure there are Goldman’s and Morgan Stanley’s out there. But there are also smaller regional players. Stiefel Nickolaus is a great example. Smaller company but big growth right now because they weren’t involved in the boondoggles of the other companies.

    Our goal is to help the independent’s “rise up” and compete on the same level as the big boys. You bring up the point that they could crush us with their tech. Why haven’t then. For five years that I was involved in the day to day at the brokerage company. We were ahead of the local big companies at every turn. The best example is even laughable! Realogy launches “leadrouter.” We had the exact same thing almost 2 years before them. I heard from a source they spent $10million on it. We spent $2000. And yes, all I would need to do is add another 5 servers and it could easily scale to the level of 130k agents.

    Our new “in the field” system will be light years ahead of anything they are doing.

    Even if the big brands wise up (which some will and as Sherry Chris mentions in her blog:

    it’s bright for some but not for all).

    But even when there are big brands left, there will be plenty of room for smaller players. Keep in mind, when you you are independent stock advisor you still need a broker/dealer to work for. (Some of those even rise up too, look at Scottrade . )

    Like I said before, the big brokers could easily crush anyone else and make 5x the profits they are now. But they need someone like me in charge to take a big risk. Now’s the time to do it. A big broker could easily come up to me or someone like me and offer me a huge salary to come and change things there with fairly free reign to make decisions. If so they will win in the huge profits gain, but again there will always be room for independents like Jay.

    PS I have so much more to say, but I need to get to writing my own blog post for today.

    • March 29, 2009 11:40 am

      I was talking to Jay Thompson about this post, and you, at the LeadingRE show. What I said to him then was, “If I’m Realogy, I just hire Eric Stegemann right now and save myself a lot of headache.”

      So when I said Tribus represents Anarch Revolt rather than Gehenna, it’s premised on the notion that Big Brokers (and that means brands, major brokerages, and networks) aren’t just going to lay down and get smothered by Tribus.

      That may not happen. They may be focusing so much on current troubles, on consolidating physical plant offices, etc. that they may miss the opportunity altogether.

      If THAT happens, then yes, it’s Gehenna. Bye bye big brands.

      I just happen to think they’re paying attention, that’s all. Can they — or all of them — execute? Probably not. But that is why I say, “Go Nimble, or Go Big — don’t try to mix it.” Realogy, REMAX, KW, Pru, etc. should be scouring the tech scene and snapping up companies like yours right now, today, while they’re relatively cheap.

      Or else, they’d best be investing like mad to ensure relevance into the future.


  6. March 29, 2009 5:18 pm

    Everyone has a price right? For the right price, I could live anywhere including Parsippany,
    New Jersey

    But the question is will they seek out the innovators, or remain with what they know. I see a lot of remaining with what they know.

  7. March 29, 2009 5:23 pm

    One other thing just crossed my mind. Why isn’t the Association of Realtors out there pushing innovation? My brokerage alone broke $1000 in fees this year to them, thats just for the office, and my personal fees. Why aren’t they out creating these products? I see this as another argument. How do they stay relevant other than code of ethics etc. Right now main reason most are members is to get access to MLS. If people would band together under a new trade group would they even need them anymore?

    I think an easy way for them to be relevant is to push technology. I know there is the CRT but in my experience, they review and test what’s out there. Why not let the CRT do R&D?

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