Some revenue models greatly benefit stakeholders, but they fail to deliver user trust.
Luckily, today we live in a relatively peaceful society. The prospect of global peace, however, does not transfer into technology. The technology industry is at war. Massive amounts of capital, progressive ideas and disruptive startups all relentlessly fight each other to build the next Big enterprise. Technology improves our lives, but just as easily, it disrupts the world economy with pyramid schemes, anti-competitive and price fixing tendencies.
The Big Five is a mighty force, a powerful set of independent communication channels — a massive user base. This top-heavy environment provides a lot of benefits, but it also limits new entrants and opens for an opportunity to utilize hidden fees, sale of data, price fixing, rate parity agreements, and unsavory debt acquisition — a bulk of revenue for today’s Fintech and e-commerce unicorns. This is why the next generation Big enterprise must set itself apart and open an incredible market, built as a stand-alone consumer destination channel, it cannot simply exploit the existing channels of distribution (Amazon is a destination for consumer goods, Google is a destination for consumer search, Apple is a destination for consumer hardware and mobile applications, Microsoft is the destination for a consumer operating system, Facebook is a destination for consumer-generated content.)
Why a classic Fintech, e-commerce, Blockchain or Crypto unicorn can’t bring themselves up to meet all requirements of a Big enterprise? The bulk of these models solely exist to collect fees and work to utilize the existing Big Five channels for profit. A classic unicorn today fails to look past utilization of the network effects provided by the Big Five. If one is to build a Big Six, it cannot be done for the wrong reasons, nor using existing channels alone. As soon as the founder or an investor asks the question “what is in it for me?” the core differentiation is lost. Mining fees, transaction rewards, referral fees, interest on the principal, profit to price-fix supply in exchange for demand — such revenue models greatly benefit stakeholders, but they fail to deliver the absolute user trust.
The bulk of classic unicorns are meant to an end. For example, ride-hailing companies commonly establish price-fixing schemes, but that fact does not provide users with an incentive to give such enterprise the benefit of the doubt when it comes to making anything other short trip arrangements. Crypto may work great to skit taxes and wash illegitimate cash proceeds, but excessive mining fees and volatility does not provide law-abiding users with an added incentive to place unquestionable trust into this cryptocurrency. Most ICOs now have failed to produce any results, instead, simply burn investor’s cash. Whenever someone sells tokens, these do not operate subject to preferred stock limitations. Unlike ICOs, preferred stockholders are entitled to the return of their entire investment prior to the distribution of any proceeds to the common stockholders. All cryptocurrencies are useless, but some have a longer burn rate than others. Some Fintech exchanges may act like they offer consumer-focused zero fee trading platforms, but risks of loss are either hidden or the fact that fees are substituted for kickbacks from exchanges they send orders to, users get stiffed regardless. There are plenty of tempting ways to establish e-commerce-for-fees or e-commerce-for-kickbacks enterprises but as long as the fee is the core revenue source, another enterprise will join in and try to collect that fee — such competitive dynamic to produce revenue does not produce a Big enterprise. Added fees do not produce trust, savings do.
The bulk of US homeownership experience is built on pay-to-play and added fees, there is no trust there to speak of on a mass scale. It is my belief that a Big Six enterprise is able to operate in unison with the rest of the Big Five, a genuinely new channel for distribution of information that touches all aspects of this distressed and vital asset. Like the rest of the Big Five, this new Big Six enterprise requires an absolute user trust, a multitude of network effects, addictive content, viable savings, unparalleled productivity, cost savings, and superior user experience. This is a massive undertaking: an all-in-one consumer-focused marketplace solution working to improve real estate property search, automated valuation modeling, transaction representation, mortgage, refinance, home insurance, renovations, design, home maintenance, home warranty, and many other real estate verticals.
Trust allows a Big enterprise to develop new opportunities and to establish uncustomary practices, otherwise known as “not standard.” User trust provides a Big enterprise with an opportunity to dig in and focus on the user experience. Such advantage creates an opportunity for a defensive victory, where fee-ridden models run themselves up against consumers. Trust is an advantage start-up can utilize to build a Big enterprise with a lasting force. Amazon — price compression, Google — cheaper and better consumer search, Apple — superior and novel products, Microsoft — massive PC adoption, Facebook — addictive behavior. In one way or another, each Big enterprise builds their product “in a garage” and inspires user trust in order to deliver their value proposition in scale. Trust is why so many users easily buy things on Amazon, send private documents using Gmail, sext on an Iphone, install third-party software on operating systems and give Facebook access to thoughts, locations, and feelings. Trust cannot be bought, it can only be earned with UX. In the same way, the trust of a homeowner can be gained to celebrate savings and practical information, instead of destructive price-fixing and fee-ridden products.
To build a consumer-focused Big Six, there are no illusions of a costly battle. For any of the companies that aim to disrupt this expensive process, the echo follows, we are up against one of the biggest problems in real estate. This is a wicked industry that operates in low frequency, hyper locality, high transaction value, and high-risk aversion. This is why a Big Six here must provide an opportunity to disrupt hidden referral fees, excessive closing costs, biased information and standard commissions — a Holy Grail quest to gain consumer trust.
HomeOpenly is a Big Six idea — dug in, under attack by swarms of fee-focused enemies. Opendoorand Zillow Offers and everything in between run up against it with excessive and sometimes deliberately hidden fees. Massive investments into iBuyer models represent everything that can possibly be included in a flawed real estate process. There is simply no reason for either model to exist in an open market supported on a well-built real estate transaction experience. These Goliaths fight a battle on two fronts — from one side they prohibit consumers to obtain genuine savings, from another, they gain power on excessive fees. HomeOpenly treats these models as wicked problems, problems that cannot be easily solved. Today, we idly stand-by while these models attack consumers with direct marketing and generate Billions in revenue. Why? Because they are too heavy to defend themselves against bad UX, built to deliver cash flows at all costs. One thing that they can’t buy is user trust.
Every day the Zillow Offers team goes to work, the marketing machine works to burn cash, but all it buys itself is bad UX. Every day this process wears itself against users who are either “sold as leads” to random brokers, or alternatively (1% out of a 100 users that do accept their Zillow Offer) lose almost all equity in their home. Opendoor faces the same problem with massive backlash from consumers who find out the difference between what the company bought and sold their home for. Yes, these users get the short end of the stick today, but HomeOpenly slowly gains the benefit of the doubt, we slowly progress in the defense. In my mind, this battle was won when Zillow Group and Opendoor had begun their scaled and an ill-conceived attack on American consumers. This is a fuse that burns on a Billion dollar delay.
A fees-hungry enemy has to wear itself out, it has to run over bad reviews, receive terrible user experience feedback and let users feel the bitter taste of unnecessary expense. When it is done, HomeOpenly can begin to reverse the experience and help our users to make homeownership an affordable, transparent and an open experience. To gain the trust of homeowners is the next big $31 Trillion opportunities in the United States alone; worldwide this opportunity is something else entirely. If an affordable homeownership experience becomes possible in the United States, possibilities will open for similar application of Internet resources in a less-developed world as well. These problems will be different, but solutions built on trust will continue to present themselves.
Any great conflict is resolved outside the conflict itself — this is a safeguard that helps us find long-term sustainability solutions in all aspects of life. This safeguard acts in ways to open opportunities for those genuinely curious and genuinely interested in “Why”
Big enterprises satisfy entrepreneurs’ curiosity as we wage our battle between:
As curious entrepreneurs, we first suspect that opportunities for disruption may exist, we design a way to address solutions as theories, we work to prove a new enterprise as a matter-of-fact. All of that becomes a scientific process. When we refuse to make blind assumptions, and instead, aim to make user-focused decisions, we lead ourselves into victory. A small coffee shop in Seattle, a next-generation operating system, a universal payment processor, a new way to organize data, a mega-consumer marketplace, an excellent mobile device, or a superior homeownership experience: either build trust or keep flogging a dead unicorn.
Focus on trust changes the question itself from “Why Build a Big Enterprise?” to “Why build anything less than a Big enterprise?”
Anything less than trust simply does not yield an absolute victory over a wicked problem.
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Feel free to contact us if you need further assistance. At HomeOpenly we aim to make the opportunity of homeownership transparent, affordable and an open experience.