The Insider: Issue 042
Good morning. This week, we step back about nine years to revisit a lesson in product positioning. And we take a breather from market data to hear some anecdotes from younger home buyers — aka, the bravest souls in the universe right now. It’s rough out there. Enjoy!
Last Week This Week
Look, you kinda know what’s up: The market is insane but possibly collecting itself, proptech valuations are experiencing shrinkage, and mortgage rates are in “a-historically high” territory.
So we thought we’d use this space to share some insights we gleaned from the Inman Disconnect event last week in Palm Springs:
- Pretty much everyone thinks all offers will be cash offers in 10 years. This kind of makes sense: “Power Buying” seems to be an effective way to capture a mortgage origination, and taking the loan contingency off the table for sellers should make transactions happen with less complexity and more certainty — a good thing.
But we wonder if we’re just going to reset the offer calculation at a new baseline. Today, cash beats contingent, hands-down. In the future, “real” cash (i.e. buyer cash not advanced by a power buyer) will beat “fake” cash (i.e., buyer cash advanced by a power buyer with fees/higher rates built in). Or it won’t matter. We’ll see, but we do tend to agree with this prediction and have been saying so for a long time now. - Many attendees reported a pullback in demand, but no one seemed particularly worried. A common sentiment was that there are still far more buyers than sellers, so the difference between, say, 10 offers on a listing to only 5 will keep home prices high. We think that take is too optimistic and puts too much stock in the assumption that we are locked in a housing shortage likely to last for years to come.
The ranks of the pessimistic are growing. This piece that appeared on Seeking Alpha last week is a great example, and worth reading. - Folks are bullish on Web 3.0, the Metaverse, the Blockchain and NFTs — not in a hype-y, self-promoting way, but in a “yep, this is gonna be a thing, and it’s gonna be awesome” way. It’s easy to dismiss something like an NFT or a location in the Metaverse as worthless and stupid. But is a digital good people desire, feel good about, and can build a market around any less absurd than, say, a diamond? Think hard about that one before you respond. We did!
Have You Heard About This?
Word On The Millennial Home-Buying Street
With the prices of homes these days, you may be wondering exactly how Millennials are doing it. Are they forgoing spendy avocado toast? Hitting it big in crypto? Cashing in on parents? Exactly how is this generation getting into the most expensive market on record? Buzzfeed is here with some juicy anecdotes gathered from readers who’ve recently bought homes. Check out, "'I Got Hit By A Truck’ And 24 More Ways Millennials Became Homeowners'".
What's Inside
Be on the lookout for episode 2 of our Other Ways podcast, which helps you look into possible futures for U.S. real estate by looking around the world. This week: The Netherlands. Make sure to follow us on Spotify and Apple Podcasts.
The recording of last Friday’s Live Webinar in which Brian shared takeaways from our recent consumer research on real estate advertising and Gen X will be posted later this week.
Inspiration Point
Are You Trying To Sell Saddles?
Sell the innovation, not the product. That’s the thesis of the memo that Stewart Butterfield sent out to the team at Tiny Speck, the makers of Slack, on July 31, 2013, two weeks before the launch of Slack’s “Preview Release”. While much of the working world knows what Slack is today, we didn’t then. We didn’t know we wanted it or needed it. And if they’d positioned it as “group chat” or a “communication platform” none of us would be using it now. Butterfield’s memo is a masterclass in product positioning. Figure out what you’re really selling by figuring out who you want your customers to become and articulating the rainbow on the other side of your product for them. For Slack, that was organizational transformation… meaning what you get is exactly that: an entirely new way to work that leaves many legacy systems in the dust. Fascinating and inspiring read.
A Woman’s Foot
Speaking of not selling saddles ====> Lululemon, the yoga and athleisure-wear giant beloved for everything from yoga pants to sports bras, is launching its first running shoe. The company enlisted Droga5 to produce the video marking the new product release, and it’s damn good. In 90 seconds flat, they’re selling a belief that a woman’s foot deserves a running shoe designed precisely for it, not one that’s been adapted from a men’s running shoe. You can see how they blazed right past the saddles and instead leaned much further into their lifestyle niche. Check it out.
Quote of the week
“The best — maybe the only? — real, direct measure of ‘innovation’ is change in human behavior.”
—Stewart Butterfield
