In Seattle, the real estate technology scene is pretty crowded. There’s the big 3: Zillow, Redfin, HouseValues. And then, there’s the cool 3: ActiveRain, Estately, and RealTech. Well, there’s another company in town, which will soon be joining the party.
Bellevue based, SecondSpace, was founded by Classmates.com executive Anil Pereira and former Microsoftie Alok Sinha, SecondSpace landed $6.6 million in venture funding from Ignition Partners over a year ago. Alok (their CTO) & Delane Hewett (their Software Architect) both had stints in the MSN HomeAdvisor teams (back in the Web 1.0 days), so they know the internet real estate space better than most new comers.
Pat Kitano of Transparent RE, talked about them 6 months ago when they came out of stealth mode, and starting flying under the radar. The most interesting thing about the company’s business plan is that they are attacking what appears to be small vertical niche. However, one does not talk venture capitalists into writing big checks for thinking small. Their sites, ResortScape.com and LandWatch.com are currently targeting consumers looking for vacation homes and vacant land. In future, they’ll probably target time shares, vacation homes in foreign countries, non regional visitors, and other second home ownership opportunities with additional sites targeted for those niches.
Technologically speaking, they have some very compelling technology under development and a very talented technical staff. On their blog, They’ve talked about using SOLR & Lucene as the basis for their search engine, which should give them a near term advantage until somebody does the same thing or writes a check for Endeca. The neural network based learning they employ, should help visitors find interesting properties easier (think of a Google-like search experience tuned for real estate) and it allows them distribute more qualified traffic to their customers (brokers, developers, etc) than a traditional means would allow. They also have even more interesting features on the drawing board, that I’m probably not at liberty to discuss, but I can say their job posting on Craigslist drops some big hints.
However, given that they only have 70,000 listings at the moment; it’s difficult to fully appreciate the impressive technical infrastructure they are building until they have more data to test it with. It’s kind of like test driving a Corvette on a short pot-hole filled road. You just know it performs better than the conditions will allow for. The problem is until the test track improves, you don’t really know how much faster the car really is.
The real question is there a market for a second home or vacation home real estate web portal, when the first home real estate market is struggling? And is that opportunity worth the millions Ignition Partners is investing? For comparison sake, a typical NWMLS IDX web site has about 56,000 listings right now and popular real estate blogs currently have a larger reach than Landwatch.com (their largest site). Even with hockey stick growth of 10,000 new listings a month, it’ll be another 7 years before they hit the million mark (which I think is the magic number of listings you need to have to be taken seriously if you have big aspirations). I think the only people that read their blog are their employees, their VC’s and I. I think they need more a LOT more listings and a LOT more traffic before they are taken seriously by the general population. That hockey stick growth better turn exponential or they better have very patient investors.
Perhaps most disconcerting, they have no visible marketing push, and no real buzz in RE.net blog-o-sphere. Maybe, they are just flying under radar of the public eye until their technological terror is fully operational? Maybe it’s because their business model and the community they serve are so different than the ones the titans Web 2.0 real estate are currently serving, that they don’t need to play by the same rules? Maybe developers don’t feel the need to read or comment on blogs? Maybe their business development leaders needs to read Seth Godin or Dustin Luther?
All I know is that sooner or later, they’ll need to soar above the clouds with after burners at full throttle or crash back to earth. They can’t fly under the radar forever with the firepower they are packing… Anyway, I’m going to be watching this company very closely. The technology under development is too compelling and the business plan is too interesting to stay under the radar at cruising speed for much longer. Will 2008 be the year SecondSpace goes supersonic?
Robbie,
I’ll leave the technology evaluation to you. From a real estate perspective, most “second-home” properties can often be primary residences to some, and second-home for others. It surprised me to see how many people own property in Kirkland as “second homes”. It also surprised me how many CA residents own second homes in Idaho.
If I were looking for a second home, I wouldn’t limit my search to a site that might be overlooked as to listing property there by people selling their primary residence. I might go there to get ideas of where to look as to community, but then I’d hightail it off to a real site with all of the listings.
It always amazes me when investors sink many millions of dollars into these ideas. I sometimes wonder what increment of value “cool” adds to a product or service.
Robbie- I think another problem they will run into with a vacation property or second home site is small MLS systems that aren’t interested in playing. Search Washington state listings on resortscape and you’ll find Seattle condos. Not very helpful if you are looking for a vacation home in Leavenworth, Lake Chelan or the Methow Valley. These are pretty important vacation home destinations in our state and not very well represented by the NWMLS nor likely to be represented any time soon. 75% or more of my business is selling second homes, mostly to tech folks in Seattle and the Eastside. Unless resortscape finds a way to get listings quickly they will soon be irrelevent.
Ardell, I agree. I did some fantasy shopping for luxury downtown condos in NYC, and ocean front land in California, and I was totally underwhelmed by the selection. However, it is impressive you can search for what’s important using simple language, instead using byzantine filtering UI. However, you don’t need venture capital to develop a world class property search engine that returns 0 listings. A crappy engine can return 0 listings just as well, and much more economically I might add. 🙂
Unless they are adding precognition and Jedi mind tricks (you don’t want that NYC condo, you really want this other one in Miami) to their search engine in V 2, they are going to need a much better inventory. Right now, it’s just a much better engineered Luxury Real Estate.com. It is impressive, but not completely useful.
Part of their value proposition is the business intelligence and site analytics information, they collect for their advertisers and the area & lifestyle information they offer consumers. So, it’s likely they make more money per listing than other portals do. However, at the end of the day, you need customer enthusiasm or traffic, and I’m unsure how they are going to create that with the slim selection they currently offer.
However, it could be argued that my time share company has the same inventory issue, and they are wildly successful. Maybe, you don’t need millions of listings, you just need thousands of exceptional ones? Still, I like what they are doing technically and the business plan seems promising, they just need to add enough high quality listings that give me a reason to come back and tell my friends.
Regarding vacation homes abroad I’ve done some unscientific searches as a potential buyer in countries I have lived in for an extended period. The resuls I got from “central engines” were dismal compared to what the local engines produced. The central engines had far fewer units, many outdated and most carried a big premium in price compared to the local comparables. This was for Europe and Africa. Don’t know about Asia but I would still guess that local re-resources have an upper hand in terms of updated inventory and competetive pricing.
Geordie,
I think another problem is that the small MLS systems are less likely to have the ability of syndicating listings than the MLS systems in the big cities do. So even if a listing agent wanted to promote their listings on Landwatch or ResortScape, they likely have to enter the listing twice, instead of living in digital listings land like the big boys do. That will hinder growth.
I think the small MLS systems will be interested in playing, for the same reason the big ones playing with Trulia, Zillow, and Realtor.com. The more eyeballs you get looking at a property, the easier it is to sell a property. If you don’t effectively promote your listings on the internet, you prevent interested buyers who are out of region, from ever considering your listing.
One question I do have, I assume the small MLSes aren’t interested in joining forces with the larger NWMLS because their members want to have the autonomy and independence they currently enjoy, despite the advantages of being in the NWMLS would bring them (easier access for big city buyers).
As a niche site, I’m not sure they need a huge percentage of the applicable listing inventory to be relevant. Resortscape appears to offer qualitative content that helps sell the “lifestyle” of the destination. I’m sure part of their strategy is indeed to beef up their inventory, but I would guess the other part is to get a lot of viewers looking for lifestyle content — when are the best ski months in Tahoe, where can I buy a new saddle for my little horse ranch in Montana, how do I prep my Aspen home for a Colorado winter, who’s a good snow-shoveling service in Vail?
Still Kevin, it’s a bit deceptive to the unsuspecting buyer that is not quite as tech savvy as you and I are used to them being.
We’ve had people ask why something wasn’t showing on Zillow, apparently thinking that it had an mls feed and all of the listings. If people choose property there, as 2nd home people are more prone to do. Even sight unseen at times. It could be deceiving if it had a lot of content, and yet not all of the homes, in the featured “lifestyle” destination.
Seems the advantage could simply be in knowing I can go to a smaller site that is targeted in a niche area and get more specifics quicker and perhaps more personal.
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