January 2007 Archives

Crowd Based Home Valuations

Nick Gonzalez:

My Currency is launching another take on the wisdom of the crowds, this time aimed at the real estate market. Unlike Zillow, My Currency derives its housing valuations from the marketplace of user opinions by having them assess properties as over or undervalued along with the strength of their conviction. For instance, if I feel a house in San Francisco for 11 million dollars is overpriced, I vote for what lower price I think is right as well as how strongly I feel that on a 1-10 scale. The conviction of my choice and the accuracy of my past votes play into how much I can affect the valuation and price trend of the home. Home listings are a bit sparse at the moment, and rely on self listing.

The hope is that experts and real estate agents will be drawn to the site and its users as a lead generation tool. Quality lead generation has been a problem for online realtors. Founder Karim Tahawi says that 2 out of 3 internet leads produce no sale. The site will allow realtors to make one on one contact to buyers by answering direct questions or attracting clients with their reputations. Experts will establish themselves by their voting records and distinguish themselves as the best at valuing different cities or neighborhood

Agents of Angst

Vivia Toy:

Brokers themselves seem well aware that their business isn’t always held in very high regard. The National Association of Realtors has an advertising campaign called “Someone You Can Trust,” which stresses that Realtors are subject to mandatory ethics training. “Not many professionals can claim that on their résumé,” the ads read.

Svetlana Choi, a senior sales associate at Bellmarc Realty, estimated that at least a quarter of her clients are skeptical when they first come to her.

“I just try to draw them out and relate to them in a way that lets them know that I’m not the enemy,” she said. “I’m not trying to snow them. I’m really just trying to be helpful.”

So why do people often have trouble trusting a broker?

25 Surprises for 2007

Doug Kass:

3. Based on misleading government statistics, the housing market appears to stabilize in the first quarter of 2007. For a few months, those forecasting a bottom in residential real estate appear vindicated. Evidence of cracks in subprime credits are ignored, with housing-related equities soaring to new 52-week highs by March 1.

4. However, continued heavy cancellations of home contracts -- which are included in the government releases on homes sold and lead to an erroneous inventory of unsold units for sale -- lead to:

A dumping of homes on the market in the spring
A quantum increase in the months of unsold housing inventory
A dramatic drop in the average home selling price.
Sales of existing and new homes take another sharp leg lower as we enter what I've dubbed "The Great Housing Depression of 2007."

Importantly, the financial intermediaries that source mortgage financing/origination begin to feel the financial brunt of "The Great Mortgage Bubble of 2000-06" after years of creative but nonsensical, low or nondocumented lending behavior.

5. Foreclosures steadily rise over the course of the year to nearly 3 million homes in 2007 vs. about 1.2 million in 2006. Deep cracks in the subprime market spread to other credits in the asset-backed securities market as a lumpy and uneven period of domestic economic growth takes its toll. In a similarly abrupt and dramatic manner, credit spreads fly open and revert back to mean valuations, as previously nonchalant investors are awakened to the reality of credit risk.

. The magnitude of the credit problems in mortgages takes its toll on the hedge fund industry, which is much more exposed to real estate than generally recognized. A handful of multibillion-dollar, derivative-playing hedge funds bite the dust in the aftermath of the housing debacle. Several California-based industrial banks fail (the West Coast is always at the leading edge of financial creativity and leverage!), and a large brokerage firm, heavily involved in fixed-income market-making and trading, faces material losses, and its debt ratings are downgraded. As the financial contagion spreads, rumors of a $10 billion-plus derivative loss at JPMorgan Chase (JPM - news - Cramer's Take) (which ultimately prove to be false) spark the largest one-day percentage drop in its shares in the past 15 years.

7. In a panic, Congress announces a series of hearings on the derivative industry, and the Federal Reserve reduces the fed funds rate by 50 basis points in each of three consecutive meetings. Those efforts are too late to affect the already weakening economy as the long tail of housing begins to affect not only consumer confidence and spending but also other peripheral areas of the economy.

Social Networks: Brokerage & Closure

John Hagel:

Fifteen years ago, he wrote a seminal book on “Structural Holes: The Social Structure of Competition.” That book argued that “structural holes” defined by gaps in connections among complementary resources in the competitive arena provide significant opportunities for entrepreneurial initiative. As he succinctly put it, “competitive advantage is a matter of access to holes.”

Structural holes still form the centerpiece of Burt’s analysis but, in his new book, he focuses on two sets of activities required to generate value from structural holes – brokerage and closure.

  • Brokerage is the function performed by people whose relationships bridge across structural holes in social networks – they help to connect non-redundant flows of information.
  • Closure on the other hand helps to build alignment among diverse individuals by creating rich connections with third parties that establish powerful reputation mechanisms.
As Burt makes clear, closure is typically not the direct result of efforts by individuals but instead is a by-product of interactions that naturally arise when dense networks of relationships form.
Burt’s book explores the complex relationship between these two activities, especially the paradox of tension and interdependence. On the one hand, brokerage is about reaching out and embracing new flows of knowledge while closure is about focusing inward and enforcing conformity, rejecting that which does not fit. At this level, brokerage and closure are deeply at odds. On the other hand, brokerage cannot function effectively without the trust that closure creates.

Advertising - LA Times Editor: "We are Web Stupid"

Robert MacMillan:

Tribune may be taking its time figuring out where it plans to be a year from now, but Editor James O’Shea at its largest paper, the Los Angeles Times, is taking its future into his own hands.
The Web will now be the LAT’s primary vehicle for news, reflecting a need to boost sales at what many people see as the future of news delivery and to try to fight what Editor Publisher called “an increasingly difficult economic climate for newspaper publishers.”

Here’s the LAT in its own words: “O’Shea employed dire statistics on declining print advertising revenue to urge The Times’ 940 journalists to throw off a ‘bunker mentality’ and view latimes.com as the paper’s primary vehicle for delivering news.”

How? Again, to the LAT: “O’Shea named Business Editor Russ Stanton to the innovation post and said the ‘Internet 101′ course would teach reporters, editors and photographers to become ’savvy multimedia journalists,’ able to enhance their writing with audio and video reports. He emphasized the need for speed in reforming an operation that he called ‘woefully behind’ the competition.”

Business Efficiency: Brazil's GOL Airlines

IAG Blog:

We have never had anything bad to say about this airline. They seem to be doing remarkable things. Only 17% of South America's people use the Internet. In Brazil its 13.9%. Now consider this as you read the next data points.
Brazil’s low-cost, low-fare airline GOL shared that it finished 2006 as one of the largest e-commerce companies in Brazil. The company managed R$ 3.7 billion in gross ticket sales through its website, http://www.voegol.com.br/. Internet sales accounted for 82 percent of the company’s R$ 4.6 billion total gross sales during 2006. Gross operating revenues from passengers flown in 2006 were approximately R$ 3.7 billion, and total net operating revenues were approximately R$ 3.8 billion.

Breakthrough Ideas for 2007

Harvard Business Review:

1. The Accidental Influentials *

Duncan J. Watts

In his best seller The Tipping Point, Malcolm Gladwell argues that “social epidemics” are driven in large part by the actions of a tiny minority of special individuals. The idea seems intuitively right—we think we see it happening all the time. Nevertheless, this isn’t actually how ideas spread. It’s better to focus on getting enough plain, ordinary people to sign on.

A Snapshot of the Marketing Business

Richard Edelman:

delman and Boston Consulting Group co-sponsored a dinner on Wednesday to explore media convergence and new ways to communicate with the consumer. Attendees included important marketers (AstraZeneca, Pfizer, GE, Citigroup, Delta Airlines, Dannon), communications firms (Y&R, BBDO, Razorfish) and media companies (AOL, Yahoo, Dow Jones, VH1, Conde Nast, Walt Disney). Here are a few of the key findings from the event:
  1. Ideas are paramount. Too much time is spent on where to communicate, not enough on what to talk about. Ideas can be gathered by listening to stakeholders and consumers online.
  2. The new sweet spot for video content is a 3-4 minute segment, between long form (movie) and short form (30 second spot). This is the average length of segments on YouTube.
  3. The web has scalability issues for major marketers. TV is still perceived as necessary to reach a mass audience for brand building, while the web is fine for a small advertiser focused on product choice/sales. TV is also seen as offering predictable sales results, key to a food business with a need to forecast production precisely. Of course there was a loud dissent from Wenda Harris Millard of Yahoo who described TV ads as “spray and pray.”
  4. There is further proof of Linda Stone’s adage, "The World of Continuous Partial Attention". Thirty eight percent of those watching the Oscars on TV were also on-line. People may be watching TV but are watching TV differently.

The Difficulty in Counting Internet "Users"

Carl Bialik:

In a column last month, I wrote about the methods behind a U.K. marketing firm's ranking of the 10 most popular online videos. The firm, Viral Factory, was forced to improvise in arriving at some of its estimates for videos that debuted before the YouTube era, when email, not the Web, was the preferred tool for sharing.

Yet even today's videos, generally watched on sites that count each view and publish the numbers, can be hard to track -- just another reminder that on the Internet, supposedly the most quantifiable medium, users remain hard to count.

To understand the video-numbers predicament, consider the site vidmeter.com, which launched this week. Its software crawls 10 major video sites, including YouTube, and grabs the stats they display. Vidmeter's editors sift through the top videos and tally total views, taking into consideration that the same video is often posted on multiple sites. (Sometimes, the same video is posted many times on a single site -- there were 18 different versions of a popular "Saturday Night Live" clip on YouTube on a recent check, according to vidmeter). Vidmeter does its crawl each day, and ranks videos on views over the most recent 24 hours. There's more detail here, and the rankings are listed here (though be aware that the site doesn't filter results -- some videos contain adult content.)

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This page is an archive of entries from January 2007 listed from newest to oldest.

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