The biggest rumble in California Monday was not just the 4.4 Richter strength earthquakes that hit between Westwood and Encino and were felt in four surrounding counties despite being five miles underground.
Rather it was the explosion, the eruption in the halls of Move, Inc. headquarters when it was announced that Curt Beardsley, recently promoted to fill one of the two shoes left empty by the departure two weeks ago of president Errol Samuelson, was joining his former boss at Zillow in the same department and with nearly the same job description.
The tremor you thought was an earthquake was actually the sound of the other shoe dropping. (It actually could have been the fourth shoe since both of these relocations were preceded by the resignation of ListHub Industry Relations VP John Whitney and Move Chief Product Officer Scott Boecker some weeks earlier. Shoe-wise, compared to Samuelson-Beardsley, the Boecker-Whitney moves were more like bunny slippers than combat boots. Collectively, however, they are approaching a medium sized Zappos order being dropped on your doorstep by UPS. The “Thud Factor” is formidable. )
When Samuelson departed, I opined that this could be the beginning of the end for Realtor.com in the form we have always known it – that of a split personality website trying to serve two masters: the shareholders of public corporation Move, Inc and the stakeholders of the private organization NAR, Inc. I have previously suggested that the smartest move for Move (sorry, couldn’t resist) was to increase the value of the corporation in a rather non-intuitive way – by giving back their biggest asset, the Realtor.com URL, to its trademark owner NAR.
Move, of course, ignored my suggestions (wouldn’t you?) and after Samuelson left issued statements hoping to minimize the impact of that loss. ‘Move won’t miss a beat,’ said CEO Steve Berkowitz, seemingly unperturbed by the abruptness of Samuelson’s departure or the lack of notice that preceded it. Later Berkowitz admitted to a high degree of pique in his interview with Rob Hahn, but held to the company line that other product leads acquired with recently purchased companies were more than capable of continuing the work without oversight from Samuelson. He even admitted that he missed being in the product trenches himself and would be taking over the strategic responsibilities (the second big shoe to fill) abandoned by Samuelson. NAR confirmed that position reiterating their staunch support of Move and its management of their trademarked brand’s site.
NAR leaders said the association’s relationship with realtor.com is deeper than any one person and expressed excitement for the opportunity the change creates for Beardsley, who has been with realtor.com for seven years, most recently as their vice president of product marketing, and has a strong track record of being proactive and getting things done.
Now with Beardsley’s departure, Mr. Berkowitz may be spreading himself a bit too thinly if he tries to cover all those open bases without acquiring senior leadership reinforcements. Losing four major officers, three with “Chief” in their title, all within a month, is not just the sign of a leaky boat, it’s an indication that torpedoes have been launched, the sonar warning signals are sounding, and the battleship is about to be broadsided.
Lani Rosales, COO AGBeat, in an editorial the day after Samuelson resigned said, “Losing Samuelson to Zillow and Whitney to Trulia is being praised as wins for realtor.com competitors, but this could actually be a huge win if realtor.com takes advantage of the opportunity to bring in new blood.” If losing two senior executives is an opportunity for a transfusion, then losing four is more like a bloodbath of Texas Chainsaw Massacre proportions.
So, now what? Surely as adept as Steve Berkowitz is at multi-tasking (or he would not be CEO), he can only do so much in a 24-hour day. With vacancies in strategic management, senior product management, revenue management, executive leadership (of its major subsidiary) and technical oversight (some of Curt’s lesser known involvements included Move’s ongoing campaign against data scrapers, and if you have ever seen his presentation on this topic you know how formidable that campaign is), it would be folly to think that one person could fill all of those slots with anything approaching proficiency let alone expertise.
So it’s time for the new blood. Here’s the problem. There are no donors.
Anyone who applies for the job, any of the jobs, has to ask the questions about what caused Errol, Curt, John, and Scott to leave, and all within 30 days of each other. What is the underlying problem that keeps Realtor.com from making progress and is apparently so serious that major leadership personnel are defecting to the competition? And if the interviewees at Move can’t/won’t answer it, the applicant will surely ask one or more of the defectors.
I’ll save all of you the time and trouble. The answer, as I have stated before, is not traffic, not product, not website design, not user interface, not even good or bad listing data. It’s politics! It’s the irreconcilable discrepancy between two opposite and competing goals: Move strives for profits to serve its shareholders, and NAR strives for influence to serve its members. Those two goals cannot both be met, By dividing resources, constraining the website, and spreading muddled messaging in lukewarm support of both, unfortunately neither is clearly articulated.
There is a parallel story being covered in the press simultaneously with the investigation of the continuing staff migration northward from Silicon Valley to Emerald City. That story is the lawsuit filed March 17 by Move (and NAR) against Zillow and Samuelson. [Disclaimer: I am not an attorney, have no degree in law, and my layman’s understanding of this subject comes from five minutes of research on Google. Caveat lector.] Charges in the suit include breach of contract, breach of fiduciary duty, and misappropriation of trade secrets. I’ll leave the legal analysis of the merits of each charge to those better able to discuss such nuances. Instead, let me comment on the second item – fiduciary duty.
Fiduciary duty, defined as the duty of trust, from the Latin fiducia, “trust,” most often relates to the management of property or money. The Cornell University law school defines it as follows:
A fiduciary duty is a legal duty to act solely in another party’s interests. Parties owing this duty are called fiduciaries. The individuals to whom they owe a duty are called principals. Fiduciaries may not profit from their relationship with their principals unless they have the principals’ express informed consent. A fiduciary duty is the strictest duty of care recognized by the US legal system.
Nuance aside, officers and directors of corporations are required to act solely in the interest of the shareholders of that corporation. In the case of most for-profit corporations, “the interest of the shareholders” is usually profits. It could also be dividends, depending on corporate policy. But profit comes almost immediately to mind when one is asked why they bought a given stock.
The Move lawsuit claims, “Mr. Samuelson’s breaches of fiduciary duty have harmed and will continue to harm because they provide Zillow with a competitive advantage it would not have had in the absence of the breaches. This advantage damages Move’s reputation, goodwill, relationships with customers and vendors, and damages Move financially.” (Emphasis mine.)
The financial damage to Move claimed by the suit is mentioned in the recitation about breach of fiduciary duty almost as an afterthought. “He did all these bad things and made us look bad and OH, yeah, and we almost forgot – he cost us money.”
Let me humbly suggest that Move and its remaining officers are likewise charged with a fiduciary responsibility to the shareholders. Let me further suggest that long term interests of the corporation and its shareholders will not be best served by filing lawsuits against competitors who make your employees a better offer than the deal they are getting from you. Nor will they be well served by the pending and continuing expense of the legal representation needed to adequately pursue such lawsuits.
Instead, the fiduciary duty of the directors and officers of Move would be met and the stockholders better served by seizing this opportunity to rid the corporation of the boat anchor that keeps it from attracting larger audiences, making more money, generating more profits and thus producing a sound return on shareholders’ investments. THAT’s what Move should be doing. And now is the time.
It’s time to get rid of the relationship with NAR, time to dump the Realtor.com name because Move can’t decide if that name should mean “salesperson” or “information cache” to the consumer.
Inman News reported in late February that “Realtor.com operator Move Inc. announced plans to launch its first-ever national TV ad campaign later this month to raise the portal’s visibility. (Emphasis mine.) Take a look at these latest Realtor.com ads. There is one called “Hesitation.” (There are a couple of 15-second versions called “Haircut” and “Prom” but they’re just shorter versions of the same message.)
Here’s the entire script: There are things in life that cause us to hesitate. But once we do them, we’re overjoyed that we did. Markets are changing. Interest rates are still low. If you’re thinking of getting into the real estate market, now may be the time to make your move. Every market’s different. Call a REALTOR today and visit Realtor.com. (Emphasis mine.)
Much like the section on fiduciary breach in the Move lawsuit mentions financial loss as an afterthought, it seems that visiting Realtor.com is a similar afterthought in the television commercials supposedly promoting that very website, commercials that are being paid for by Realtor.com, not by the REALTOR association that seems to benefit more from the airtime than does the sponsor.
Meeting ones fiduciary responsibility to ones’ shareholders is a primary responsibility of the all officers and directors of every corporation. Move has an opportunity to do just that by cutting the final strings that tie it to the NAR, changing the name at the top of the homepage of its flagship website to the corporate name, and pursuing the competition with vigor, enthusiasm, and freedom that had they existed earlier might have retained the talents of Errol Samuelson and Curt Beardsley.
The bottom line here is Move needs to make money. They cannot do it with their current business plan. They don’t need the direct relationships with 800 MLSs to get listing data. Zillow and Trulia have proven that and have been eating Move’s lunch for the past couple of years despite not having such a benefit. (Rob Hahn posted a great article today speculating that Zillow does not need organized real estate [i.e. MLS or NAR] to succeed. Well, if Zillow doesn’t need MLS/NAR, certainly neither do Trulia or Move.)
If Move wants to compete directly and with full force and vigor of a half-billion dollar corporation, they need to recognize that continuing the affiliation with NAR and the REALTOR organizations isn’t going to work. As Sherlock Holmes once said, “When you have eliminated the impossible, whatever remains, however improbable, must be the truth.”
The truth for Move, however improbable, is that in order to succeed it must cut the ties with NAR, launch Move.com as the flagship and start doing what they have long claimed they could do best – regain the number one position in the battle of the real estate portals.
It’s time for Move to take advice from their own advertising: There are things in life that cause us to hesitate. But once we do them, we’re overjoyed that we did.
Or they can sit back and wait for the next Zappos shipment to drop.
For this post only:
Cause: The plot thickens as shoes start dropping.
Effect: The road not taken may well be the only way out.