February 2009 Archives

Bob Sutton:

Who would you choose to sail your boat? Who would you vote for? Who do you want for your boss?

The little test above is from a study summarized in the always wonderful BPS Digest, my vote for the best place in the world to find translations of academic research. It is from a forthcoming study in Science. As BPS reports:

"John Antonakis and Olaf Dalgas presented photos of pairs of competing candidates in the 2002 French parliamentary elections to hundreds of Swiss undergrads, who had no idea who the politicians were. The students were asked to indicate which candidate in each pair was the most competent, and for about 70 per cent of the pairs, the candidate rated as looking most competent was the candidate who had actually won the election. The startling implication is that the real-life voters must also have based their choice of candidate on looks, at least in part."

Then, the researchers asked kids and adults the "who would you choose as the captain" question and "For the pair of candidates shown above, 77 per cent children who rated this pair, and 67 per cent of adults, chose Laurent Henart, on the right (the real-life winning candidate), rather than Jean-Jacques Denis on the left."

Daniel Taub:

Apollo Management LP, the buyout firm led by Leon Black, agreed to invest as much as $150 million in Realogy Corp. after the real estate broker reported a 2008 loss of $1.91 billion.

Realogy, owner of the Century 21 and Coldwell Banker agencies, said Apollo will provide the "equity infusion" only if necessary and that it may not need the full amount. Realogy said it remains in compliance with debt agreements, according to a regulatory filing yesterday.

"This is very powerful support to us during these challenging times and is not available to most companies or our competitors," Chief Financial Officer Anthony E. Hull said on a conference call with analysts and investors.

Realogy reported the loss after writing down $1.79 billion in assets and investments as its brokers were hurt by the worsening housing slump. Apollo acquired Realogy for $6.8 billion in April 2007, the height of the buyout boom, and has been battered by the real estate recession. Realogy said yesterday home sale transactions slid 18 percent last year and the average home sale price fell as much as 10 percent from 2007.

Chief Executive Officer Richard A. Smith called speculation that Realogy will file for bankruptcy protection "completely false and without merit." Such talk is the "unwarranted, wishful thinking of our competitors," Smith said on the conference call.

Jay Rosen:

In the age of mass media, the press was able to define the sphere of legitimate debate with relative ease because the people on the receiving end were atomized-- connected "up" to Big Media but not across to each other. And now that authority is eroding. I will try to explain why.

It's easily the most useful diagram I've found for understanding the practice of journalism in the United States, and the hidden politics of that practice. You can draw it by hand right now. Take a sheet of paper and make a big circle in the middle. In the center of that circle draw a smaller one to create a doughnut shape. Label the doughnut hole "sphere of consensus." Call the middle region "sphere of legitimate debate," and the outer region "sphere of deviance."

That's the entire model. Now you have a way to understand why it's so unproductive to argue with journalists about the deep politics of their work. They don't know about this freakin' diagram! Here it is in its original form, from the 1986 book The Uncensored War by press scholar Daniel C. Hallin. Hallin felt he needed something more supple--and truthful--than calcified notions like objectivity and "opinions are confined to the editorial page." So he came up with this diagram.

Let's look more carefully at his three regions.

Food for thought when considering traditional advertising expenditures.

The Economist:

The rise of online social networks, with their troves of data, might shed some light on these matters. So The Economist asked Cameron Marlow, the "in-house sociologist" at Facebook, to crunch some numbers. Dr Marlow found that the average number of "friends" in a Facebook network is 120, consistent with Dr Dunbar's hypothesis, and that women tend to have somewhat more than men. But the range is large, and some people have networks numbering more than 500, so the hypothesis cannot yet be regarded as proven.

What also struck Dr Marlow, however, was that the number of people on an individual's friend list with whom he (or she) frequently interacts is remarkably small and stable. The more "active" or intimate the interaction, the smaller and more stable the group.

Thus an average man--one with 120 friends--generally responds to the postings of only seven of those friends by leaving comments on the posting individual's photos, status messages or "wall". An average woman is slightly more sociable, responding to ten. When it comes to two-way communication such as e-mails or chats, the average man interacts with only four people and the average woman with six. Among those Facebook users with 500 friends, these numbers are somewhat higher, but not hugely so. Men leave comments for 17 friends, women for 26. Men communicate with ten, women with 16.

What mainly goes up, therefore, is not the core network but the number of casual contacts that people track more passively. This corroborates Dr Marsden's ideas about core networks, since even those Facebook users with the most friends communicate only with a relatively small number of them.

Put differently, people who are members of online social networks are not so much "networking" as they are "broadcasting their lives to an outer tier of acquaintances who aren't necessarily inside the Dunbar circle," says Lee Rainie, the director of the Pew Internet & American Life Project, a polling organisation. Humans may be advertising themselves more efficiently. But they still have the same small circles of intimacy as ever.

Related: Pew Internet on Adults & Social Networks.

Social networks are, at best, peripheral to the central strategy of driving traffic to, and keeping prospects on your agent and broker websites, then converting them to buyers and sellers. They can be used to promote services and listings. Successful relationship building tactics certainly apply online, as they have in the physical world for centuries.

I linked in the previous sentence to Jay Deragon's website/blog: "The Relationship Economy...... The Intersection of Technology and Human Interaction". Deragon frequently references social networks and conveniently offers predefined "share" links for a number of sites. This is straightforward and can easily be offered on your agent sites, listing websites, services, ReData Maps, open houses, new developments and specific searches. Our Main Street software supports smart, vanity short links which are ideal for these sites. Reliable, trustworthy and pervasive.

Some Thoughts on the Housing Plan

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Clive Crook:

The administration's housing plan seems well thought out. All three parts address clear weaknesses in the present arrangements.

The refinancing element, aimed at borrowers in good standing, allows Fannie and Freddie to refinance loans where the value of the mortgage is between 80% and 105% of the value of the property. Up to now they have not been allowed to do this (unless the mortgage is insured). Many borrowers in good standing have seen their loan-to-value ratios climb into this range because of falling house prices. The rule preventing refinancing at current lower rates is self-defeating from the agencies' own point of view, since it increases the chances of default. The plan puts this right--helping both the GSEs and their borrowers. (Some complain that the change only helps borrowers with loans owned or guaranteed by the GSEs. Well, yes, those were the loans affected by the restriction in the first place.)

The loan modification part is aimed at borrowers who are at imminent risk of default, and is modeled on the scheme that the FDIC has been testing and advocating for some months. An explicit public subsidy is involved--to the tune of $75 billion--which in effect will be split between lenders/servicers and qualifying distressed borrowers. Lenders and servicers get cleverly structured incentives to reduce monthly repayments to 31 percent of gross income. (Note that modifications up to now have been few and far between, and have often left repayments unchanged or higher than before, once penalties and arrears have been added back.) Lower repayments obviously lessen the risk of default.

Marketing that Works

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Every organization wants to interact with customers and prospects in the most efficient and effective way. It is no longer necessary to spend bags of money on newspaper and TV advertising. Southwest Airline's blog-o-spondent illustrates one approach, while BMW provides another:

I enjoy reading Robert Farago's www.thetruthaboutcars.com. Irreverent and interesting, TTAC offers a deep view into the auto industry. Scanning my newsreader this morning, I noticed Farago's link to a live video stream of a BMW product introduction in Munich (the link may not work after a few days).

BMW's approach is worth considering:

I did not learn about this event in major media websites such as the wsj.com, nytimes.com, cnn.com, cbs.com or ft.com. Rather, a car enthusiast site was informed about the event (email?) and posted a link. BMW, or its advocates must have:
  • been aware of this site,
  • understood who their audience was, and
  • been capable of getting the word out in a way that is relevant today.
Ford, General Motors, Honda, Hyundai and Toyota have been active in online campaigns as well.

Brokers and agents need

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Private-equity firm Apollo Management [APOLO.UL] has hired financier Henry Silverman as chief operating officer, the Wall Street Journal said, citing people familiar with the situation.

Apollo did a number of deals during the private equity boom and has investments in companies including gaming firm Harrah's Entertainment Inc, Claire's Stores and real estate company Realogy. [ID:nN03495853]

Silverman founded Cendant, pieces of which have been bought and sold a number of times by Apollo.

No Free Lunch

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Business that rely on free or cheap software have built an essential part of their identity on quicksand.

Two recent examples:

Novell co-founder Craig Burton laments the state of free blogging software:


Google Maps, which many organizations use without payment, is tightening up the terms of use. The latest version restricts "batch geocoding" (convert listing or other addresses to Latitude/Longitude for display on a map):


10.11 offer a batch geocoding service that uses Content contained in any Google Services; and

"Google reserves the right to refuse or discontinue the Service to anyone, and to disable users' access to the Service, including the Maps APIs or any Content, at any time in its sole discretion with or without notice."

Mike Arrington notes that Google is "putting the squeeze on free apps":


What to do?

Evaluate your vendor's track record for quality, reliability, competency and cost savings. Compare that with your business strategy. Do they align? Is the software effective? That is, will it reduce costs and improve your business?

Today, certainly, we all must invest before the harvest.

Bob Lefsetz sings their praise:


But I had to request a pickup a day in advance and give them a six hour window.

Huh???? I've got to stay home for SIX HOURS?

Now if this was the Post Office, I wouldn't count on them even coming during those six hours, even coming at all. But having told this woman that I wanted someone between 10 and 4, there was a knock on the door EXACTLY at 10. The delivery person picked up my copier and was gone that fast.

The paperwork? I did all that online. Printed the bill myself.

Point of all this? I'M TELLING YOU!

Consider Fedex. Do they create their own website, then let their drivers use any software they might find to do their jobs? How would Lefsetz's words be different if FedEx built their business on free and cheap software? (they would be out of business)

FedEx, from the beginning, has strived for customer service excellence and has invested in technology to make that happen.

Today, people will share their good and bad experiences quickly, as Bob Lefsetz has.

Evaluate your vendor's track record for quality, reliability, competency and cost savings. Compare that with your business strategy. Do they align? Is the software effective? That is, will it reduce costs and improve your business?

Are you ready for the harvest?

About this Archive

This page is an archive of entries from February 2009 listed from newest to oldest.

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