Online Extra: Commentary: Lessons from a New Economy Survivor
By Scott Kucirek
August, 2001, marks my two-year anniversary of writing "Net Journal" for BusinessWeek Online's Small Business channel. It's amazing to me how fast time has flown -- and how everything has changed in the world during these 24 months. Seems like it was only yesterday when we launched our Web site, zipRealty.com, buoyed by the enthusiasm and excitement of the New Economy. The world was our oyster, and all we had to do was work hard and spread our message to change the way real estate was bought and sold.
Unfortunately for most of us who plunged into this brave new world, its promise hasn't been realized. As I headed to the Real Estate Connect Conference in San Francisco in July -- the largest conference for new technology in the real estate world -- I couldn't help realizing how fortunate we've been at zipRealty.com. Many of my friends and colleagues, who had the same dreams we had two years ago, have had to live through their companies' folding and are now working at traditional banking or real estate companies, trying to understand just what happened to them.
This two-year anniversary seems like a good time for me to sit back and analyze what has happened to me, too. What things have changed at our company and what has stayed the same? Following are some of the lessons learned by a New Economy survivor.
What has changed:
The timeline for success has lengthened to a realistic level.
In the company's early days, we envisioned growing at an incredible pace and gobbling up market share once we had assembled an army of agents across the nation.
Unfortunately, we completely underestimated the time and effort it would take to build a great agent team -- and the systems and people needed to support it. As many experienced businesspeople and investors warned us, a new company should plan on doubling both its projected budget and the original time estimate for reaching its goals -- and that might come close to what will actually be needed. Even though I had heard this hundreds of times, I always figured we were fine.
Two years later, I understand exactly what the experts were saying. Fortunately, I believe we now have a much better understanding of our growth path because we have learned from our experiences.
Our core business is much more focused than we had envisioned.
I thought that I knew how to say no to stray opportunities and stick to the basics. However, after we received $16 million in a second round of funding, we decided to pursue many opportunities (relocation, new-home sales, foreclosure properties) in real estate. We justified these pursuits as all being in the general domain of real estate. But each of these initiatives resulted in the company hiring additional people and investing more money and time to manage our growing empire.
Problem was, this came at the expense of staying focused on our true core business: delivering outstanding residential real estate sales service through our agent team. It took the harsh realities of the market and our own experience with trying to take on new projects to realize that we couldn't tackle an entire industry at once, and that we would be better served perfecting one real estate venture before expanding into new channels.
We now take the proper time to analyze expenditures and their projected returns.
In our early days, we spent too much time throwing money at problems -- we moved to a new building to solve our overcrowding and installed a new phone system to handle our large volume of calls -- figuring we didn't have the time to do proper analysis. We were growing fast and thought we were running out of time.
As things got tougher, we started reducing costs indiscriminately to make sure that our burn rate went down, thinking it didn't matter what the long-term consequences were if the survival of the business was at stake. Neither policy was healthy because they led to a lot of rapid changes and policy shifts that left employees wondering what was going on. Now that we have put the roller-coaster ride behind us, we're back to taking the time to ensure that we have a sound financial plan -- and that we stick to it.
Things that will never change:
Great people make great companies.
This became even more evident when our company started to mature and people started realizing how the economy and the way we were doing business were changing. It was easy for our team to believe in the company when we were growing at a meteoric pace and hosting nice events for employees every month. However, during the past seven months, when we restructured (reducing the size of our nonsales staff and bringing in a new CEO to lead the company) and were struggling with some large changes, we learned who was really passionate about the success of the company and who was just in it to make a quick buck.
In all honesty, I don't know how we could have survived the last few months without the extraordinary effort of many committed people. Luckily, many of the things we had done to keep good people motivated never really changed. Sending special notes, an occasional lunch, or a thoughtful anniversary gift makes them feel that are a part of the company and reminds them that they are appreciated for their efforts.
Building a great company requires a crazy dream, daily passion, and long-term vision.
No matter how the economic landscape looks and how the business is doing, I and the rest of the team have maintained the belief that this little company will grow into the global leader in real estate. This manifests itself in a daily commitment by our team and myself to out-work and out-hustle the competition. Although our fortunes would change week to week, we also believe that no matter what happens in the short run, in the long run we were improving the real estate industry and the experience for homebuyers and sellers across the nation. That vision and passion exists today as a cornerstone of our culture that makes coming to work a pleasure.
We're not out of the woods by a long shot. We still have to achieve profitability and expand our team. But it appears that the startup phase for us is over, and now we are on to a new stage of making this real estate fledgling grow. I am more certain than ever that we're on track to be an overnight success -- in the year 2007.
Kucirek is a co-founder of zipRealty.com, an online real estate brokerage that allows for the entire purchase or sale of a house via the Web. When the company hired a new CEO in May, Kucirek's title changed from president to executive vice-president of people and culture. He writes a regular Net Journal column for BusinessWeek Online's Small Business channel