A Real Estate Community: An Interview with Dan Powell of Update Lane

Dan Powell has a vision for a community in the real estate industry. He envisions sellers and real estate agents collaborating on the sale of a house. He envisions buyers being able to conveniently join and help complete the sale. He also sees related business (contractors, inspectors. title companies, etc.) being able to advertise their services cheaply and effectively to people that are actually interested in seeing them (sound like a familiar model?). And to make things even more interesting, Dan sees all of this activity leading to actual social benefit, with profits easily being shared with important not for profit organizations.

The place that Dan has created for all of this to happen is Update Lane. Update Lane is a collaborative web site that allows sellers, agents, buyers and vendors to play their roles more easily and more collaboratively. I talked to Dan recently and asked him to tell us more about his vision, and the problems he saw that convinced him there was value in his solution.

1) You developed the idea of Update Lane from real experiences with problems that you encountered as a real estate agent. Will you share some of those with us?

The key to a successful REALTOR is the systems they have in place. Your income is limited by your time. The trick is to maximize your time to make a comfortable living and still balance work with life. Time is spent between managing listings and transactions and marketing to prior clients and finding new ones. This involves a great deal of communication.

Timely communication is just tough. My principle clientele are middle class families with both husband and wife working. Or, single parents. Either way, calling during working hours did not work on their schedule. When they were home, I was showing homes to other clients. Emailing is ok. But, I could still never put enough information in front of them consistently at their convenience so that they understood what I was doing and what the market was doing to help them make educated decisions. Emails and phone calls allow you to communicate that info just once and then it’s conveniently forgotten about.

For communicating to my sellers, I wanted a tool that will enable me to educate them on the market so they can make informed decisions on their listing, and let them track what I’m doing to sell their property. My buyers were covered with the different home search sites. I needed a system to keep the search organized. For both my buyers and sellers, I needed to manage and communicate the transactions – staying on top of the due dates, sharing contracts or other important documents with everyone involved, and ensuring a smooth closing.

I needed 5-6 combinations of tools to effectively do what I wanted to do. All of which charged anywhere from $50-$700 annually and were built on slow technology from the 90’s. I couldn’t bring myself to supporting these businesses, the tools were clunky, out-dated and would have ended up taking too much time to implement and manage. It wasn’t a solution.

2) You have a vision of Update Lane as a community of people involved in the transaction of selling a house. Can you describe your vision of what update Lane can be?

Our industry has five stakeholders – clients (selling or buying), agents, brokerages, the other companies that service the housing market (I’ll refer to these as "vendors"), and our local communities. They all need to work together to create a fluid housing market. If these relationships are healthy, our community is healthy and grows. A healthy community facilitates new and existing social projects, new jobs, new families, and a better place to live.

Our primary users are agents and clients. But, our secondary users are brokerages and vendors. Update Lane creates transparency and accountability for the agents and clients. We help agents manage more listings in less time and bridge the communication gap with their clients. Clients can stay educated on the market to make informed decisions about their property. Brokers get a powerful tool they can offer to attract and retain more agents – and help their agents provide great customer service. Vendors get an opportunity to build stronger agent and broker relationships to increase referrals and advertise directly to those that will use their service – keeping the service free for the agent. All documents or files can be shared and stored online; one step closer to going paperless. Update Lane gives a portion of each sale to our local communities as specified by the purchaser.

Update Lane brings everybody that’s a part of the marketing or closing of a property together in one forum. And, our industry and communities reap the benefits.

3) You spent a lot of time developing an interesting business model for Update Lane. Can you explain it to us?

I call our business model the "the mushroom sandwich model". To understand it, you just need to understand the issues and tendencies of real estate agents. The average REALTOR is in their 40’s and 50’s and did not grow up with computers or the internet. Agents are the center for guiding their clients, helping them coordinate anything with their house, and referring business to vendors. Vendors target agents for referral business as a part of their marketing plan. Sellers complain about a lack of communication and transparency. Everyone thinks closings can be hectic which is why you see businesses advertise "smooth closings". There can be 20+ documents for just one transaction. That’s a lot of moving parts. The systems that agents need to survive cost the agent quite a bit. Agents pay for leads, desk costs, systems, websites, marketing, farming, local, state, and national REALTOR associations, and MLS fees. Then, their clients beat them up on commissions. In the end, the agent feels like everyone is in their pocket.

Our mission at Update Lane is to provide a fast, easy, affordable, and value-added service for our industry. For affordability, we charge just $10 per transaction. Sellers can feel comfortable demanding this service from their agent at that price. But to put the cost only on the REALTOR, we felt did not accomplish our mission for the industry as a whole. So, we enable business to business advertising or co-branding where vendors can purchase the transactions and send them to agents. This keeps Update Lane free for agents and gets the vendor directly in front of those that will use their service – the agents and their clients.

Accounts will always be free so sharing information will always be easy. This gives Update Lane the opportunity to expose our service to everyone that’s a part of a transaction. One transaction could lead to five or more new accounts; ballooning our growth, the mushroom effect.

Our mushroom sandwich model removes all objections from the agent and incentivizes each one of our users (agent, broker, vendor, client, community). When agent’s say they don’t have time, Update Lane creates them time – it’s fast, easy, and lets them better manage their workflow and enables them to manage more listings in less time. When they say they need more leads, they qualify for our lead referral system just by using Update Lane (at no cost). When they worry about cost, we’ve given them a way to keep transactions free. But, the real demand has to come from their clients. If their clients expect transparency and accountability from their agent, the agents will use the tool. We "sandwich" the agents by empowering clients and helping vendors build their business. And the service "mushrooms" with the free accounts. We keep our message positive by addressing the real needs of the agent.

4) You make "Giving" a big part of your story. Pardon me for asking but what does Giving have to do with starting a business?

I have never been motivated by money. As an active real estate agent, I have even waited months before finally cashing a commission check. My joy comes from problem solving, implementing solutions, and giving back. My father dedicated a good portion of his life to his local community. Today, he has a park named after him in my home town. I recently heard that Jerry Lewis raised over two billion dollars for muscular dystrophy. Wow. Giving back is such an important aspect of our lives.

I know I need to live for more than just who I am. My wife and I left our jobs in the middle of our careers to volunteer in the US Peace Corps. We volunteered for two years in the depressed but proud country of Lesotho in southern Africa. Sustainable development is rare and hard to come by. We helped a little and failed a lot. But, that little will last someone’s life time. And maybe they will help someone else too. We all make the world what it is. If I can give just a little, maybe it’ll help. Sum tertius.

The "Giving" aspect of our site is the most important. We need to accomplish the fast, easy, affordable, and value-added. And, we need to deliver great customer service. But, the "Giving" piece allows us all to remember our communities (our 5th stakeholder).

We started by listing a handful of national NPO’s and requesting our users and communities to recommend other NPO’s that we should list on the site. We will research each NPO that gets recommended. Provided that it is legitimate and meets our requirements (like program ratio), we will add them to our "Giving" page. Each NPO will receive a promotional code and each time that promotional code is used to make a purchase, Update Lane donates a portion of that money to that NPO. We hope to have several NPO’s in each state across the US and each country where we have Update Lane users. Giving is important.

Summary

Dan works hard to keep his customers informed. His blog "The Update Lane Blog" keeps his customers informed of important changes going on with the product. He creates articles that provide sellers important information on how to sell their homes, from an insider’s perspective. He even Tweets (find him at UpdateLane) But most of all, he has taken the time to identify the people in this market, the problems that they face, and develop a product and business model that provides value for everyone. In an industry where the news is currently all bad, Dan’s approach is breath of fresh air.

The Value Knowledge Gap

What is the number one thing that a product manager has to do? There are many responsibilities of a Product Manager that other people can pitch in and help with such as product marketing, requirements definition, market research, etc. But there is no other individual that can make sure the Value Knowledge Gap is filled. What is the Value Knowledge Gap (GAP)? The illustration below shows it best





Notice that I am lumping people together that are both inside and outside the organization. (I use the term “Buyer” here as defined by Phil Meyers in his excellent book “Tuned In”).

Every organization has a few key people that clearly understand the value of a company’s solution within a market. They probably lived in the market, spent time in the trenches, immersed themselves in the technology behind the solution, and can recite the value in their sleep. Unfortunately if the company is going to grow, these individuals (always few in number) can not talk one on one to everyone in the market. They have to rely on others to both explain and understand, or else the people in the market and the organization find themselves sorting through a bewildering collection of features and costs?

The Product Manager is uniquely positioned in the middle of the GAP, and needs to fill it before the product hits the market or your company is not going to be firing on all cylinders. They have to explain the value. Value (with a capital V in this post) is simply:
Value = Size of Problem ($) – Cost of Solution ($)

The best way to fill the gap with is with content. Creative web-sites focused on customer problems, informative blogs, webinars, etc. are great for Buyers (David Meerman Scott lays it out for you in “The New Rules of Marketing and PR”) , and your internal stakeholders will appreciate product demo’s, data sheets, ROI calculators, etc. that help tell your story. But before you start creating the content you need to make sure you have the elements required to determine the Value.

I break the Value definition process into the three steps shown below: (much of this thinking is based on the Pragmatic Marketing framework):
Explain Problem – High level summary targeted at the organizational level
Needs - High level statements of action that must be performed
Problems – Preventing needs from being met (Hint: make sure you can state them as problems. If you can’t you probably haven’t identified the problem yet.)

Note: If your product is attempting to create a need (i.e. a new market) or is not solving a problem this process may not work, but neither will any others. Good Luck!

Quantify Opportunity – Determine the time it currently takes to perform tasks for each person
Persona – Roles played by people in the organization.
Tasks – Specific actions that persons perform. For each task answer the following: Does my solution affect the duration, frequency or quality of this task?

Offer Solution – Explain the features and price of the solution, and map these features to the tasks performed by the persona’s.
Features – Units of functionality within the product
Pricing – The total of all fees and services. Value is only understood for a complete solution.

Need an example? Let’s use a successful company that we all admire (I hope) with a plan for a new search engine as an example of each phase:

OK that was cheating, but you get the picture. Time savings per search is easy for everyone to assign value to.

Here is what I like about this model. It helps you figure out where the Value Knowledge Gap is coming from. Maybe you aren’t explaining the problem, or maybe your product doesn’t seem to solve it.

I am guessing that you will find variation in where the GAP is coming from in your organization from market to market and product to product.

In this blog I will discuss ways to fill the GAP. Thankfully it is a never ending pursuit because, as I said before, it is the one responsibility a Product Manager has to fulfill. If there were no knowledge gaps, I would not have a career!