I am not a realtor. My co-founder, Nick, is not a realtor. Neither of us studied real estate, never spent time getting our licenses. Our only connection to the industry has been from the outside looking in, aside from a handful of transactions we’ve been involved with (more on this in future posts). But what we lack in real estate, we make up for with technology. When we first met at a startup accelerator over a decade ago, Nick and I had no idea we’d one day work together, much less on a real estate venture. Back then, we were launching our first startups, while getting a crash course in how to build a tech company from the ground up. For the next twelve years, we lived and breathed the principles of technology. We worked at and emulated mission based organizations like Google and Apple which defied conventional top-down corporate culture in favor of bottom-up values like transparency, collaboration, openness, and disrupting the status quo. We were drawn to the idea of meritocracy where everyone (regardless of level or role) was expected to voice their opinion, and the best ideas and talent are rewarded and rise to the top. We had front row seats to companies who successfully used technology to democratize entire industries, like Wikipedia has done for knowledge and Red Hat has done for software. When you create open tools for people to use and share broadly, the results can be powerful. Almost always, the nimble innovators prevail over the comfortable, entrenched incumbents. When it comes to technology, change is the one constant… something Nick and I have become addicted to.
When we stumbled upon the residential real estate category -- largely by accident -- we were certainly impressed by the sheer size and importance of the category which employs nearly two million people nationwide, represents 15% of the GDP, and has one of America’s most powerful lobbying organizations. But what really struck us about real estate is how alien it was compared to the technology world. I remember one early investigatory conversation with a friend who had spent a career in tech and transitioned into real estate sales. One of the first things she brought up was how much she missed the collaborativeness of tech. At the time, I didn’t quite understand what she meant. But I’ve since learned that, unlike tech, where teams work collectively toward a shared goal, real estate is highly individualistic where one’s own self interest is the singular objective. It’s every man for himself -- competing for deals, competing for referrals, competing for clients, competing for commissions. It can get pretty cutthroat, especially if you want to make it to the top.
So then we did some anthropology. We spent months studying real estate agents. We had calls with them. We got coffee with them. We dug into their underlying motivations. We even launched an earlier version of our current business where we recruited real estate agents to perform various tasks on behalf of property professionals looking for an extra set of hands. We quickly learned that not all agents are created equal. There’s a tremendous gap between top producers and the rest with a long ladder to climb to the top. On average, it takes an agent 12 months to complete their first transaction, and several years to earn a steady book of business. Without money to invest in leads, agents struggle to compete against the top performers who can invest monthly in bus stop ads, billboards, digital advertising, and other forms of paid marketing. As we dug deeper, we learned of the tremendous lopsidedness that exists within this profession, where roughly 90% of the transactions are facilitated by the top 10% of agents. These top producers gain awareness and status in their markets, which win them more clients, more referrals, more transactions, more commissions… ultimately more money to invest in getting more leads. This creates a virtuous cycle that grows the disparity between the top 10% of agents taking the lion’s share of the market and the other 90% trying to break in.
When we learned this is the way the industry has operated for ages, Nick and I saw an opportunity for change, something technology is known for. We wondered, could we bring the best of tech to the world of real estate to produce a solution that’s better for everyone? Like so many categories before us, could we democratize the agent marketplace to allow the other 90% to demonstrate their talent, ideas and expertise without needing large amounts of money to do so? Could we build a platform that empowers all agents to get in front of buyers and sellers, not just those with deep pockets and impressive portfolios of past transactions?
As we considered these questions, all we could see was opportunity. The same bottom-up principles of tech like collaboration, transparency and openness could innovate the status quo of real estate in a way that creates a powerful meritocracy where the best agents rise to the top based on their skills as an agent. We could democratize real estate through open tools that agents can use to share their perspectives and expertise broadly for the benefit of home buyers and sellers. The implications would be wide ranging, transforming both the industry and the information the industry is built upon.
Then we had our EUREKA moment.
We learned about the Multiple Listing Service (MLS) which serves as the foundation of all data for real estate nationwide. This data set is created by and inputted by a seller’s agent representing a listing. The problem with a listing agent being in control of real estate content is the inherent bias that this represents. Listing agents are hired to sell houses for the most amount of money in the least amount of time possible. Since their compensation depends on it, listings are hand crafted and designed to achieve these goals, which injects an incredible amount of bias. This is why you often see homes staged to distract buyers from issues. Listing descriptions tend to create a false sense of urgency with flowery language to seduce buyers into thinking this house is “the only one for them.” And listing images are typically photoshopped to create unrealistic expectations where every room is shot with wide angle lenses and enhanced for lighting and spaciousness. And what’s more, this one set of pictures and description of a house are the ONLY information that is available on a property. So if you are a buyer, you are being “fed” the one version that a listing agent wants you to see. No multiple perspectives, no pictures that aren’t approved by the listing agent. Nada. And buyers have figured that out too. They know that the content they see, which has become the backbone of the industry, really is “too good to be true.” There’s no honesty, no authenticity, no genuineness. There are no alternative views or bottom-up perspectives included in the information presented. Just top-down bias that becomes the record of truth. This is the root of the problem for home buyers (and for the agents as well). The entire industry is built upon the one-dimensional, highly curated content that is repeated everywhere a buyer may be looking for information on a property. Why should this massive industry, and the largest purchase decision of a person’s life, be controlled in this way? This deep-seated bias, this fundamental issue of access and control, really struck a nerve with us, and has become our driving force.
Nick and I believe it’s time to usher in a much overdue era for real estate. Trusty’s slogan is “real estate made real” since we think it’s time for more honesty, more authenticity, more transparency, and more voices in the conversation. Trusty is a resource for home buyers to learn the truth about the neighborhoods and homes they’re interested in, by offering dynamic, unique, genuine, multi-faced content from multiple real estate agents in a market, not just the one selling the property. For home sellers thinking about going to market, it’s a great way to get thoughts from multiple agents about the current home value and upgrade opportunities that could have a strong ROI and positive impact on pricing. For sellers who already have an agent, Trusty brings multiple perspectives which serve as real-time feedback on the home’s listed value and helps them make decisions related to presentation, like whether it would show better and attract greater interest if it were staged. Ultimately, it’s a platform for agents to make a name for themselves by showcasing their local market insight and expertise through genuine and authentic content. Like any good democracy, we believe that everyone deserves a voice, regardless of level. And like a true meritocracy, we believe the best talent and ideas will win.
Obviously, we’re big fans of Trusty since we can clearly see the benefits through the lens of a home buyer or home seller. Home buyers will benefit from real, unfiltered information about properties they may be interested in, and be exposed to a variety of real estate agents they may want to work with. Home sellers will benefit from similar transparency about their own properties so they can price and present them in the most optimal way to get the results they want. Real information yields actionable results. Although the consumer benefits are obvious, a big moment for us was the overwhelmingly positive response we received from agents in the ecosystem surrounding home transactions. “I’ve been searching for something just like this,” and “I’m so glad I can finally show my network how much work I do and how I think as a professional” were some of the memorable comments. We loved that we could give agents a platform to “show off” a bit and exhibit their talents. Several agents brought up the benefits to listing agents since crowdsourced opinions about things like staging and pricing could eliminate some of the awkwardness for an agent having a conversation with a seller who has an out-sized opinion of their home and its value. These were concepts that Nick and I hadn’t even considered, which made us love Trusty even more. I recall one conversation where I asked, “Why does this not exist in the world?” And their answer, to me, was illuminating: “I think it needed to come from someone outside the industry.”
So although we may not be from real estate, we’ve learned enough about it to know that it is in desperate need of technology. And by technology, we don’t just mean tech tools. What real estate needs is a technology culture, and the mission-based principles that will lead the category into its next phase of greatness.
We’ve seen this story play out many times before, and we’re excited to write the next chapter for real estate. More to come.