New York City is one of the only cities in the United States that has never had a comprehensive one-stop-shop for listing data (current or historic). For years, the major power brokers tried to “get together” to create an MLS , but we all know how that turned out. Michael Smith is the CEO and Founder of Streeteasy. He has confronted this monumental task head on and has revolutionized how people search for available listings on the web, and research historical data. I sat down with him recently and discussed his company.
Shaun: How old is the company?
Michael: The company is almost 3 years old.
Shaun: And your title is?
Shaun: How many people is the company comprised of?
Michael: Ten. A big group of ten.
Shaun: Must be ten very efficient people. What hours do you work? (Laughing) Is there some advantage to owning a web based company, where your hours are not traditional?
Michael: I think so. We have an employee in California. Today we’ve been able to do a lot with very few people. Ten for us is actually quit a big number. For the first two years it was much smaller than that.
Shaun: Why did you start the company?
Michael: In a very basic sense, we started the company because we felt there was a real lack of actionable data for consumers, when it came to residential real estate.
Shaun: So is your primary focus on this site data?
Michael: I think traditionally the real estate industry (as far as listings) have really treated something that is on the market as being on the market today. And if it’s on the market tomorrow then fine. And if was on the market yesterday, we don’t haV much to say about it. It’s a sort of status quo market place. We felt that data in all forms, historical, current, and related, is an important part in making a purchase decision. I think fundamentally we believe that you should be able to look at historical data, as far as real estate is concerned. Whether that it be historical within a building, what does the other apartment sell for and when? Is it historical in terms of the neighborhood? How was the neighborhood performing at the time? Is it historical as far as how has that neighborhood evolved over time in terms of what’s the type of inventory and the pricing levels for that inventory? Some of which we addressed and some of which we are still very far away from addressing.
Shaun: That’s a monumental task. I know that a lot of this information is held very close to the vest.
Michael: I think it is. But I think a lot of the information was always out there and it was a question of whether one could organize that information well. There’s tons of public information. Most of it very poorly organized and most of it of highly variable quality. What happens when you start to build a repository of data is you have the ability to cross reference it. Tomorrow if a broker puts a co-op listing into a building that we have 20 condo listings we’re pretty sure that listing is wrong. We’re pretty sure that building didn’t get converted into co-op. And if it did then that’s an event also and we need to know about that. We have a data base of all of the current years’ tax assessments for every single borough, block and lot in New York City. If we get a tax number coming up in our listing that’s marked differently than the one we have recorded for, then something needs to be fixed. In which case we are providing better information for the consumer and to the real estate professional who’s got that listing; someone maybe keyed it in the wrong way. But also I think in terms as far as historical information nobody was counting. I mean at the end of the day some of the bigger brokerages, we all know who they are, were doing it for their own listings. So they were looking at how their listings were performing, but this is what they’ve done historically and then of course, there were systems that only real estate professionals had access to, which also collected information over a longer period of time but, didn’t really have to analyze that information. For New Yorkers, it just seemed like there wasn’t a lot of data for the consumer.
Shaun: Is it similar to a hybrid of what Miller Samuels did as far as data collection and giving a current market report?
Michael: No. To take it from a Miller Samuels point of view or even Halstead, Corcoran, Douglas Elliman, they all produce a quarterly market report that looks back. Well, if you’re an equity investor in Wall St. today you’re not likely to take somebody’s annual report and make an investment decision based on old data. You’re probably looking at the news on that company today and the news on the company last week. And seeing what the upcoming schedule is in terms of executive announcements around that company combined with that historical information. We’re taking the exact same approach. What we are saying is the listing discount of last years inventory in the Upper East Side doesn’t really help me to make a decision on how much I want to bid for this particular unit. What might help me is knowing that trend in terms of where things are going, also knowing where are the last three apartments in this building listed. How long did they stay on the market? How many price changes were there? What was the ultimate listing discount, between where they started and where they ended? Were those apartments in buildings where you really needed to know your way around the building? Did the same real estate professional sell more than one unit in the same building because they happen to know the building well? Or was it a very democratic building like the Trump Place buildings where there are lots of brokers involved? Those are all bits of information that get you to the point of being able to make a decision as a consumer. We’re not going to become a brokerage. That was never the idea for the business. We believe that New York City is a city served very well by real estate professionals. The idea is to support consumers so when they engage with a real estate professional they can spend some quality time together, if you will.
Shaun: So how successful have you been in collecting this data from an historical and from a current stand point?
Michael: I think successful on both fronts. There will always be more data that we want to get.
Shaun: So would you say that your current site is a complete MLS type system for the consumer?
Michael: I think as far as Manhattan is concerned, there’s no place that you can go and get better information than Streeteasy today.
Shaun: New York Times online?
Michael: Absolutely not. New York Times online is advertising supported listings. So if you’re Corcoran, you have an annual advertising contract with them and X amount of listings that you can show. Some portion of your inventory you don’t have in the New York Times. If you’re a smaller firm, as you know, then you’re definitely paying on a per listings basis, in which case you’re going to advertise not the listing you’ve had for four months but the listing that you got last month. They’re showing the portion of inventory which they’re paid to show. So in terms of completeness, we feel we are much more complete. We have participation from 90 plus percentage of all brokerages in Manhattan. Whether that be for the biggest to the boutiques and I don’t think there is another site that can make it like that today
Shaun: How challenging was that to get participation of all of the large brokerages?
Michael: We had a few guiding principals. One of them was that accuracy is way more important than volume. So we never took the approach of getting listings from lots of different sources. If you have the same apartment, the same listing from four different sources and you produce a heat map, you have a very bright spot over that apartment. Believe me, we see it over and over and over. So our guiding principal has been to have really high quality data and support the real estate professional. On the consumers side we’ve tried to keep things as open and as free as possible so that consumers can do their own analysis and can get in touch with real estate professionals easily. I think all that goes to our benefit in terms of your original question, which was how difficult is it to get listings? I think when you treat both the consumer and the professional fairly then they’ve been very giving in terms of there willingness to participate. Consumers are moving away from print and they’re moving online..
Shaun: How do you differentiate yourself?
Michael: We put our heads down and stay busy. We put our heads down and say, “How do we produce quality data? How do we make sure we get everybody involved?” Regardless of what association they are a member of. If you’re a boutique three person firm that specializes in a four square block area of Tribeca, we’re interested in you. This gives the boutique company a lot more power than before. I think the larger companies have realized that the boutique firms may have an edge. Technology has evened the playing field and the boutique firms that are creative enough to understand this will move with technology, while the huge 10,000 lb. gorilla is going to take time to adapt. I think it’s going to be hard to disagree with that. I do think that the advantage the larger firms continue to have is they’ve always had a presence. Whether it’s their brand, their signage, whatever it may be. It’s vertical. There’s still a signage advantage that comes along with having a big retail operation, which some firms do.
Shaun: How are you getting your data? Let’s take an example of a large firm you work with.
Michael: The majority of the sites send us a feed.
Shaun: Do they have to give you permission to send you a feed for you to use on your site?
Shaun: What about historical data?
Michael: We’re keeping everything. We’re creating our own historical information. We’re not asking people for historical information. Some people have given us historical information. I don’t want to slice this to be gentle with this.
Shaun: How much traffic do you generate on your site?
Michael: Today we’ll do about 4 million page views a month.
Shaun: And most of those page views are coming from?
Michael: New York City and its surrounding area. We have lots of people from Europe and other states but the large share of our traffic is NY metro.
Shaun: Do you know if it’s brokers?
Michael: Mostly consumers, about 10% brokers and 90% consumers. We have great participation as far as the number of brokers that are in the city and brokers that go on the site. The consumers generate a lot more page use then brokers. The consumers are going through listings and trying to learn about a neighborhood. Learn about a building.
Shaun: Where do you want the company to go to in the next two years?
Michael: We are in the process of building out of metro New York, so we’ve going to have all the surrounding counties information. There are some other cities we are looking at as well. But our focus remains New York City.
Shaun: Would you ever go internationally?
Shaun: Where do you see the future of online connection between buying a home for the consumer? And what do you feel is really missing right now for the consumer online to make the connection to the real world?
Michael: It’s a great question. I think consumers really want to understand two things. A consumer who is looking for a place to live wants to understand real estate in the context of where they want to live. To tell someone to buy in Tribecca or Soho or the Upper East Side doesn’t really tell that much. What they really want to know is where they can get the best value. Where’s that value going to appreciate? So if it’s not the center of any one of those neighborhoods, it’s really going to be the edge. But is it really the edge that’s going up or is it the edge that’s going down? And I think that’s what they want to understand. But I think they also want to understand the chemistry of the neighborhood. They really want to understand on a much more granular basis. What is my life going to be like if this is where I live from the point of view of my commute and from the point of view of the businesses where I spend my money? Because as we know in New York people spend the lion share of discretionary income a few blocks from home. So whether that it be the restaurants to the services that are available, they want to understand that. And I think that the kind of data we’re collecting today ultimately benefits consumers, because they’ll be able to do that. I think for real estate professionals that the same thing is also true. They become specialists and I think they can make a really strong argument, boutiques and individuals, can make a really strong argument that they’re the best real estate professionals for this particular building, this particular block, this particular neighborhood because there really going to have all of the data that’s available. Not just through conversations on the street not just conversations with their own client but also the information that comes from other peoples clients. What is the view like? How many windows are there relative to the size of the apartment? What kind of renovations where made over time? That’s all really important information because it lets you know; what can I do with my bucks? Is this a building where you have 90 days in order to complete a renovation otherwise you pay a $1,000 a day fine? Or is this a building that’s more liberal in terms of the rules they put on renovations? What has been done to the apartment in the recent past and how should that affect its value? Where you can start putting data around those conversations, then you start producing actionable information. You start making the consumer become far more educated and you make a real estate professional deal with a consumer that’s far more educated, which is far more efficient in terms of their compensation.
Shaun: I noticed you have a section on the site that has blogs and discussions. What do you think about blogs? Is there a place for it? Do you think that it maybe makes the site lose a little bit of credibility if you’re opening it up to a forum where anyone who is educated or not educated say whatever they want in this open forum?
Michael: In general discussion is good. I think that everybody understands when things are posted on the internet at this point they understand exactly how serious they should take it. And what happens online is people’s reputations are built over time just like they are in the real world. I think that if someone who has a history of making credible and reasonably intelligent comments, people online take it a lot more seriously than someone who has no track record or has a track record of quite the opposite. I think there’s a bit of self filtering that goes on. I think that it’s been difficult, when we’ve had comments we considered to be very cheap shots, which it’s very easy to go online and track somebody else by name. And by and large we don’t permit it. We reserve the right to edit whatever we want and if we think that shots are taken that are unfair we will remove them. But our principle has always been that the bigger the discussion, the better it is, especially because it’s New York, where people absolutely respect and participate and debate all day long every day. It’s not a city where you’re expected to think like the guy right next to you. And everyone in the city knows that great ideas come from that kind of conflict. So I think to the extent that we believe that conflict is more positive than negative but obviously we reserve the right to delete stuff that we consider to be counter productive. Our editorial principal is to say what you want but be kind to others. When you look at either the blogs of real estate professionals, individuals or the real estate blogs like Curbed and Brownstoner that exist in the city, I think that they serve an enormously positive purpose in terms of what they are providing.
Shaun: How do you promote yourself? How does the consumer know about Streeteasy?
Michael: We have no consumer marketing what so ever. We’ve done a small amount of industry marketing, but consumers find us through word of mouth, blogs and media. We spend a lot of time developing relationships with writers.
Shaun: In terms of the way people use the site, what surprised you the most?
Michael: How passionate so many people are in New York about real estate. I mean it’s really amazing how passionate people are. You have to have your real estate conversation every single day. We all understood that going in, but I think the level of passion from consumers has been really incredible. I also think that the quality of information coming from consumers has been quite high.
Shaun: Do you find that people are surprised by how much information is public?
Michael: Everybody loves public information unless it’s about them.