People have been talking for years about how the Internet was going to  disintermediate real estate agents much in the same way that Internet has largely disintermediated travel agents. For the most part, things haven’t turned out that way. Here at nuroa we appreciate that real estate agents still play a critical role in the buying and selling of flats and houses.

But before I get too far ahead of myself, let’s define what “disintermediation” is. Simply put, it means cutting out the middle man; cutting out the (real estate) agents and putting the principals (the buyer and the seller) in more direct contact.

Why is disintermediation relevant? For the consumer, cutting out the middle man also means cutting out the middle man’s commission.

Take a look at the travel industry, for instance.  A lot of people buy their tickets or book their hotels online. No need to walk down to the local travel agent’s office and sit down while she searches through all of her catalogues. Now you can just do it yourself via Expedia or eDreams.

Real estate, however, has proven to be more difficult to disintermediate, because there’s so much more at stake than a €2000 vacation. For most people, their home is their castle. Buying a home is the most important financial decision in most people’s lives, and it involves lots of boring stuff like laws, numbers, notary publics and annoying sellers.

So here’s the big question: Would you really be willing to spend €400.000 online based only on pics and maybe even a video tour? 

I probably wouldn’t, and I bet that most people wouldn’t either. The notable exception is Spanish real estate giant Metrovacesa, which has proven that their clients are willing to buy new developments (obra nueva) online based entirely only on the specs. For second-hand homes, however, it’s likely that there is — and maybe always will be — a trust factor that can only be dealt with by physically inspecting a property and, in many cases, by receiving the expertise and guidance of a real estate agent.

That’s why I think that Redfin’s model makes a lot of sense. They decrease the importance of the real estate agent via the Internet, but don’t deny that the agent currently still has an important role to play. There’s a lot of interesting consumer advice online (whether in the form of Q&A’s, wikis, blogs, etc.), but real estate agents are still important for the part of the process that require human judgment and sensibility — all of the intangible stuff that might include body language, things like negotiating price, figuring out an owner’s urgency to sell, knowing when to kiss the owner’s ass, knowing when to ignore or threaten the owner, figuring out how to outbid a competitive offer without paying too much, etc.

Redfin, in effect, offers an Internet business with a human component — they call it the “Redfin Advantage”. Under this model, the customer does all of the parts that don’t need an agent — e.g., finding attractive homes online,  researching neighborhoods, scheduling home tours and making an offer. The agent only steps in an expert negotiator — a closer — is required. The agents are paid a salary by Redfin, and their bonuses are based on customer satisfaction rather than sales price, which means that agents’ interests are aligned with the buyers’ and everyone’s goal is to get the lowest sales price. (Under the traditional model, the agent’s incentive is to get the highest price possible, as her commission is usually a percentage of the sales price, so the agent’s incentive is probably more aligned with the seller or at best conflicted.)

As proof of their effectiveness, Redfin released a study yesterday noting that on average their clients saved $15,568. And at the end of the day, regardless of all of the bells and whistles related to different types of real estate sites, the bottom-line is the same: Home-buyers want the best property at the cheapest price. Whoever can accomplish that feat has a good chance at really disrupting the current marketplace.

Perhaps as a testament to the disruptive potential of Redfin’s model, the traditional real estate industry seems pretty much antagonistic towards Redfin, as the company only reinforces the idea that real estate agents are largely irrelevant, except maybe for certain later-stage parts of a transaction. And the take-home message is clear: Since agents are only needed at the last part of the transaction, they should cut their standard commissions dramatically.

What do you think about Redfin? Is it the future of real estate? Or is it more likely that at some point real estate agents won’t be necessary for even the latter stages of a transaction — will a clever algorithm someday be able to do it all? And even if a clever algorithm could do it, would you trust it with your life savings?  TechCrunch’s claims to the contrary notwithstanding, can a machine ever entirely replicate or surpass true expert knowledge?

In our effort to stay cutting edge and try out new things, we’ve launched our own video channel at nuroa.es and nuroa.de called “NuroaTV“. I think that this makes us the property search engine to delve seriously into videos.

And no, we’re not trying to be YouTube II, but we do think that video is just another format for presenting our users with relevant information and feedback from other consumers. I think that the results — that is, the video below — speaks for itself!

In any case, last weekend a bunch of us (along with our young video director, Xesc Estapé and his production team) hung out in the centre of Barcelona to see what average people thought about various issues, one of which was the effect of the real estate “crisis” on the Spanish elections, which will take place this Sunday. We thought that it was timely given that even the New York Times had written a story about real estate and the Spanish elections.

Our series is called: “¿y tú qué piensas? (so what do you think?)“, and it fits into our strategy of offering hyperlocal content that keeps real estate consumers well informed about current market conditions. For the moment, the video is on a separate page on Nuroa’s website, but we will soon integrate our videos directly into the search results page.

For this first video, we went to the streets of Barcelona to see what the Spanish public really thought about José Luis Rodríguez Zapatero, the Socialist prime minister, and his conservative rival, Mariano Rajoy in the context of the housing crisis. Let’s just say that people were generally pissed about the current situation.

But don’t take my word for it. Take a look for yourself! And please let me know what you think about the video. (Warning: The video is in Spanish, but there are still quite a few very funny images that can be understood no matter what language you speak!)

Politics makes for strange bed-fellows.

I just read Karl Rove’s explanation of why Hillary won. It’s the Wall Street Journal’s most popular piece of the day.

We have Karl Rove to blame for George W. Bush’s success in American politics. Rove has often been the “architect” of GWB’s election campaigns, getting him elected Governor of Texas in 1994 and 1998, and then as President of the United States in 2000 and 2004.

A few details about Rove:

• He never knew his biological father. After his parents divorced when he was 19, he learned that the man who his “father” (Louis Claude Rove) was not his biological father, and he later discovered that his adoptive father (Louis Claude Rove) was gay. He says that he loves Mr. Rove, though he’s not against using anti-gay sentiments to convince Republican voters to support his candidates.
• He started college at the University of Utah but never finished.

• He has known George W. Bush since 1973.

• He was fired from George H.W. Bush’s 1992 presidential campaign after it was discovered that he had spread a negative story in Esquire Magazine about another Bush adviser who was more favored than he was.

• GWB won his first election as Texas Governor, in part because Rove’s staff called voters to ask whether people would be “more or less likely to vote for Governor Richards if [they] knew her staff is dominated by lesbians.” During the race, a regional chairman of the Bush campaign was quoted criticizing Richards for “appointing avowed homosexual activists” to state jobs.

• During the 2000 Republican primary against John McCain, Rove’s staff played on racist fears to undermine rival John McCain, asking: “Would you be more likely or less likely to vote for John McCain for president if you knew he had fathered an illegitimate black child?”

• He eventually resigned as a Bush adviser when it became clear that he had helped to leak the name of a CIA operative to the press because her husband had written an op-ed in the New York Times doubting that weapons of mass destruction existed in Iraq. Bush let his “architect” go, because he was involved in too many scandals and investigations related to the misuse of power to attack and undermine political enemies.

I give this background to explain why I wasn’t shocked by the clearly racist innuendos advanced by Rove in his explanation of Hillary’s victory, which makes me think it’s just a sneak peek into the Republican National Committee’s eventual attack on Obama if he becomes the Democratic nomination. Either that, or they’re trying to convince Democrats and Independents to vote for Hillary, because they’re ready to go to battle with Bill and Hillary — Rove’s been locked in that battle since 1992 when he got kicked off of Bush Sr.’s campaign — but Obama is still too new and too charismatic to attack too directly.

Rove notes that Hillary won for four reasons:

• Her appeal to women: No problem here.

• Hillary’s “personal” moments: His attack on Obama here is phrased in subtle racial terms. He says that Obama shouldn’t have told Hillary that she was “likable enough”, because it was “trash talking [that] was an unattractive carryover from his days playing pickup basketball at Harvard, and capped a mediocre night.” Excuse me? I agree that Obama’s comment was ungracious, but John Edwards was a lot more aggressive in attacking Hillary. And both Bill and Hillary attacked Obama non-stop (a point he credits Clinton for below). Would the basketball imagery be equally applicable to Edwards, Hillary or Bill? Or is it most suggestive when used about a black guy? When I first read it, I thought: Hey, maybe I’m being too sensitive, maybe Rove isn’t a racist despite the tactics he’s used in the past. But then I read on and realized that the basketball comment was just a warm-up.

• Bill’s attacks on Obama: He just got through saying that Obama was ungracious to attack Hillary’s likability. But Rove then goes to great lengths to credit Bill Clinton for attacking Obama (though Rove is careful never to actually praise either Clinton too much). He says that Clinton makes a decent attacker but promises that there is more harmful information out there about Obama (and suggests that he has it) and that there are people who are/will be more skilled at executing the killer blows.

In his words: “Former President Bill Clinton hit a nerve by drawing attention to Mr. Obama’s conflicting statements on Iraq. There’s more — and more powerful — material available. Mr. Obama has failed to rise to leadership on a single major issue in the Senate. In the Illinois legislature, he had a habit of ducking major issues, voting “present” on bills important to many Democratic interest groups, like abortion-rights and gun-control advocates. He is often lazy, given to misstatements and exaggerations and, when he doesn’t know the answer, too ready to try to bluff his way through. . . . He won’t escape criticism on all this easily. But the messenger and the message need to be better before the Clintons can get all this across. Hitting Mr. Obama on his elementary school essays won’t cut it.“

So Obama is “lazy” and given to misstatements, but George Bush was Shakespeare? Didn’t he have difficulty speaking basic English? Also, isn’t it curious that the votes that Obama missed were precisely about abortion and gun-control — two issues that Republican strategists use to rile up their supporters? Might this just a pre-emptive attempt to dissuade Republicans thinking about voting for Obama? Given that Obama is undoubtedly pro-choice and pro-gun control, why would a Republican highlight that Obama supposedly missed votes? Would that make it easier to get their favored positions passed?

In summary, according to Rove, Obama is a lazy, uninformed, basketball-playing Negro who is afraid to — or too lazy to — vote on issues such as gun control and abortion.

• Obama is a great speaker but he’s not saying anything meaningful: On this point, I can’t really disagree, except to say that most politicians don’t really saying anything meaningful, relying mostly on soundbites and symbols to get elected and re-elected. Anyone remember “you’re either with us, or you’re against us”? Hardly a very sophisticated statement of substantive foreign policy, though it literally changed the world with its simplicity (or better said, simplification of complex issues). And as the Hillary crying episode showed, sometimes images are more important than being brilliant and substantive. It’s sad, but that’s how people like Karl Rove get weak candidates like George W. Bush elected President.

That being said, I have no doubt that Obama will make a more substantive president than George W. Bush.

But then again, that’s not setting the bar very high.

I was surprised to read Michael Arrington’s TechCrunch post on Friday that Edgeio was going to be shut down. On the one hand, it’s kind of scary, my being in the vertical search space and all.

There’s always that moment of initial fear when you read something like that. Maybe nuroa really isn’t going to work? WTF have I gotten myself into? And HTF did they burn through $5 million in less than a year without being able to generate any revenue or relevant traffic or enter into any significant strategic alliances? This is perhaps the biggest question in most people’s minds. (It still amazes me that a start-up that launched in Feb. 2006 could receive a cheque for $ 5 million from a VC only 7 months later! I’m assuming the valuation at that point must have been somewhere between $15 and $20 million?)

But upon closer analysis, it’s clear that Edgeio’s problems had less to do with being a vertical search engine and more to do with being more of a concept than a business. To me, Edgeio’s failure reflects the danger of creating a tech-geek project with very little appeal or applicability in the real world.

Following are the four main lessons that I think can be learned from Edgeio’s demise.

Not All Vertical Search Engines Are Created Equal: Whereas the majority of vertical search engines crawl classifieds portals like Idealista and ImmobilienScout 24, or have a direct relationship with real estate agencies like Sasi or Engel & Völkers, Edgeio’s model was to operate — as the name suggests — on the “edge”. Cutting through the PR jargon, this means that they only looked for classifieds listings on blogs or other RSS-enabled sources — this explains Michael Arrington’s involvement and value-added to the project. TechCrunch was the ideal platform from which to launch a blog-focused vertical search engine. As TechCrunch explained when Edgeio launched: “The Edgeio ethos is that content belongs on the edges, and that is where the name originates from (Edge input/output). Content on the edges means the content on the millions of blogs and other sites out there which Edgeio does a good job of aggregating and organizing.” So whereas property search engines like nuroa aim to disrupt the traditional classifieds space by crawling mainstream classifieds sites, Edgeio chose instead to bet that sellers would be willing to create blogs on which they listed their properties or other classifieds, and Edgeio would then aggregate those blogged classified listings. The basic problem is that a business focused only on classifieds in blogs is not currently very scalable, as the majority of people still use more traditional offline and online options (e.g., classifieds portals and newspapers) to advertise classifieds goods.

Classifieds Are Local: Given that their main market is the blogosphere, Edgeio was never focused on any one geographical market. If you take a look at their website (which is very well-designed by the way), the tagline is “search the world’s listings”. Their value proposition was that they granted you access to over 100 million listings in 1,484,953 cities and 166 countries What does this mean in practice? If I’m looking for an apartment in Barcelona, why would I care that there are lots of listings in 1,484,952 other cities? Also, I don’t really see why local advertisers would choose to advertise on an “international” website, particularly if this international website isn’t one of the leaders in its local classifieds space. In other words, if I am Expofinques and I want to strengthen my market position in Madrid where I’m not as strong as I am in Barcelona, why would I advertise on Edgeio as opposed to the other sites that are more focused on Madrid? And if I’m a property buyer in Barcelona why would I be more interested in searching “the world’s listings” than in searching “the most complete set of listings in Barcelona”? Start-ups have to focus on a market, or a product, or on something in particular. Being focused on “the world’s listings” is largely meaningless, other than as a concept.

Keep Your Burn Rate Down Until You Have Some Indice of Possible Success: Edgeio’s hype always had more to do with the connection to Michael Arrington and TechCrunch than anything else. Whereas companies like Trulia, Simply Hired and Indeed have generated significant traffic, marquee-name investors (Sequioa, News Corp. and The New York Times) and are growing nicely (e.g., Trulia’s U.S. traffic is up 130 percent in 2007, to 1.2 million unique visitors per month, according to Comscore), Oodle’s vanguardist and diffuse approach never seemed to catch on. Nonetheless, it seems that they were determined to buy their success and hoped to convince investors to continue investing in them, even though they had no material revenues, traffic or partnerships. Michael Arrington is pretty direct in explaining why Edgeio had to close down: “The company burned through [$5 million] according to plan, meaning they ran out this month. The product roadmap was fulfilled, meaning development lags didn’t hurt the company. But the revenues didn’t come in and user/partner milestones weren’t met. And that meant no one else was going to put more money into the company.” In the comments section, he’s even more reflective and frank: “In general I’ll say this - it is unwise for a company to spend a lot of money building out infrastructure before a product proves itself.”

This is just further proof of what Fred Wilson of Union Square Ventures noted in a recent post entitled “Why Early Stage Venture Investments Fail“: “[I]t’s pretty clear to me that most venture backed investments don’t fail because the business plan was flawed. In my experience at least 2/3 of all business plans we back are flawed. Most venture backed investments fail because the venture capital is used to scale the business before the correct business plan is discovered. That scale/burn rate becomes the cancer that kills the business.”

It’s Easier to Criticize than to Do It Yourself: I can’t help but note a certain irony in noting that one of tech’s most noted and sometimes more hyper-critical bloggers — he created the Dead Pool with a certain glee — is the co-founder of the most prominent vertical search engine to enter the Dead Pool, despite all of the natural advantages that he has given his access to financing and marketing. Most of us would give our left arm to appear prominently in TechCrunch, but Edgeio is proof that expensive marketing can’t make up for an ill-conceived product.

And it also shows that like the old saying goes: “Opinions are like assholes. Everyone has one.” It’s a lot easier to criticize others than to create a successful product yourself.

The best we can do is hope to learn from Edgeio’s mistakes so as not to end up like they did.

These days, it seems like everyone is trying to start an online classifieds business. In the web 1.0 era when online real estate portals were themselves disruptive, their primary competition online was amongst themselves. The offline classifieds players thought that Internet was a fad, so they didn’t really feel the need to invest heavily online.

Now everyone is trying to start some sort of classifieds business online. Media groups have seen the light and are moving and promoting their newspapers (and classifieds sections) online. Directories are trying to monetize their listings now that few Internet-savvy people will search for a business using print Yellow Pages. In particular, a lot of directories are trying to get into local search, with classifieds as a key component of their offering. Social networks like Xing and LinkedIn realise that it might be easier to convince a business executive to pay €200 per month to recruit job candidates than it is to convince her to pay €10 per month for a premium membership, when you can pretty much get all that you need with a basic — that is, free — account. Even Facebook has added a marketplace section.

I started thinking about this recently when TechCrunch UK announced that News Corp. might be interested in buying LinkedIn. The story appears fairly credible, as it’s been picked up by venerable sources such as The New York Times, VentureBeat and The Wall Street Journal’s Kara Swisher). At first glance, the link between, let’s say, The Wall Street Journal, MySpace, SimplyHired (a US jobs search engine that News Corp has invested in), Globrix (a stealth UK property search engine in which News Corp. invested “millions of pounds” a few weeks ago) and LinkedIn might seem a bit farfetched.

What the hell is Rupert Murdoch thinking?! (That’s the same question people asked when he bought MySpace for $580 million. Now that Facebook has been valued at $15 billion, even though it’s the number 2 social network — MySpace is still number 1 — people are definitely not doubting the wisdom of Murdoch’s strategic investments.)

Well, one clue might be to look at what News Corp. did with SimplyHired and MySpace — SimplyHired powers MySpace’s job board. That’s one way to monetize MySpace’s traffic. Perhaps not coincidentally, SimplyHired also powers LinkedIn’s job board. And VentureBeat suggests that the rationale behind News Corp’s interest in LinkedIn is as a way to monetize the Wall Street Journal’s traffic once Murdoch removes the subscription model (Murdoch plans to make the Journal free, like the New York Times, which is now free and based on an advertising model — note that the New York Times is an investor in Indeed, SimplyHired’s primary competitor and another vertical search player).

In the VentureBeat author’s words: “News Corp.’s strategy, from what we understand: Somehow integrate LinkedIn’s network with the Wall Street Journal as well as its other newspapers around the world, hopefully figuring out how to recoup News Corp.’s newspapers’ declining classified ad revenue in the process.”

And Swisher’s description of LinkedIn is instructive: “[LinkedIn] is trying to be a business classified service with online presence and connection elements woven in.”

So this means that going forward, the online portals like ImmoScout and Idealista are going to face increasing competition from:

• powerful media groups like News Corp., The New York Times Company and Axel Springer, all of which need to move online to deal with declining offline classifieds revenues;
• the Yellow Page giants, which need to conquer local search or become irrelevant; and
• the social networks like Facebook, MySpace, LinkedIn and Xing, which find it difficult to monetise their traffic and are looking to classifieds as one possible solution.

In short, the classifieds space is becoming very fragmented.

In such a context, a property search engine like nuroa makes increasing sense. Why would a user want to search site by site, format by format, giant by giant, when she can encounter all of the relevant information in one place?

Maybe that’s why vanguardist media groups like News Corp and the New York Times are eagerly investing in vertical search engines, aware of their monetisation potential in the increasingly fragmented world of online classifieds.

For those of you who are generally interested in social networks like LinkedIn, I’ve included an interview with Dan Nye, the new CEO of LinkedIn. Intruders TV also has an interesting interview with Reid Hoffman (but they don’t allow you to embed the video).

Dan Nye (new CEO) of LinkedIn speaks with Kara Swisher of the Wall Street Journal

It seems that everyone is talking about the fact that online real estate sites are increasing in traffic despite the overall drop in demand. The story’s been getting a lot of press recently, and El Pais, a leading Spanish newspaper, is the latest to jump on the bandwagon, noting that in 2007, Spanish real estate sites doubled their traffic even as demand dropped dramatically.

The relevant data includes:

• 50% of all home seekers begin their searches online
• The total number of Internet users that search on online real estate sites to find apartments has more than doubled, from 1,6 million in 2006 to 3,5 million in 2007
• The increase in users can mainly be explained by the rapid growth of Internet usage in general
• Fernando Encinar, Idealista’s communication director, points to Germany’s ImmobilienScout as an example of the fact that a stagnant market combined with strong growth in Internet usage can still create a highly profitable online real estate business (I’m trying to compile more detailed info to analyze this last assertion in more detail, but the facts speak for themselves — Germany has had a relatively flat real estate market, but ImmobilienScout just got bought at a valuation of €545 million).
• Fernando also notes that properties in Madrid now stay on the market 10% longer (on average, apartments stayed on the market for 189 days this year vs. 172 days last year), while in Barcelona apartments stayed on the market for 35,5% more time (183 days this year vs. 135 days last year).
• 1/3 of the apartments listed on Idealista have decreased in price, and prices have fallen over the last 3 months by 0,5% in Barcelona and 0,9% in Madrid.
• After years of more aggressive increases in the price for listing on their sites, some real estate portals have waived price increases to retain existing clients with lesser budgets.
• The article suggests that the four main challenges for the existing real estate portals are:
  • Finding ways to improve their search filters
  • Offering more and better features
  • Playing a more active role in the sale and purchase process, apart from just providing listings and similarly general information. Alternatively, offering the real estate agents a better return on their investments will be essential in deciding which websites survive and which sites fail.
  • Getting to know the Internet user better, offering more personalized service and the option to participate in helping to generate content/count on the user’s feedback.

I couldn’t agree more. The ideas are clear. Now it’s time to see who executes best.

I was recently invited to be a speaker at the International Classified Media Association’s general meeting, which was entitled “100% Digital”. I was supposed to represent and explain web 2.0 to traditional print media classified companies. Henri and I took the trip to Amsterdam on Wednesday (i.e., Halloween), missing the puente but looking forward to the famous coffeeshops.

When preparing for the conference, I was expecting a bitter backlash from incensed traditional media types given that my message was: “Promote online or perish! Property search engines like nuroa are the future!”.

Ouch!

Harsh, right?

But the general response was: “Yeah, we know that, so how can we work together? Let’s sit down and consider the possibilities. We are all prepared for co-opetition”.

In general, everyone was very receptive to the message, and in fact, my message was one of the milder ones out there. Some members of the organization said it in far more blunt terms, making sure that members clinging to purely traditional models got a kick in the pants, in case they were still stuck in the 1990s.

And equally as impressive, a bulk of the presentations were “member-to-member”, meaning that current members of the organisation explained to their co-members how they’d updated their sites and what advantages they’d reaped as a result.

I spoke a bit with the CEO of a Dutch vertical search engine and learned abot how classified sites in Estonia, Finland, Russia and the US were working on integrating web 2.0 features. It’s amazing how people in such diverse places are generally doing the same sorts of things.

And there were workshops on usability, SEO, applying classifieds to the mobile world, etc.

In general, not a web 2.0 stone was left unturned.

And you definitely had the sense that the members had formed a close-knit family, facing an adverse situation, but determined to survive. This despite that fact that some of the participants were from “big” companies like Careerbuilder, Schibsted and Trader.

I thought it was a great conference, and I’m happy that they invited me (after reading a comment that I’d left on another post and then reading my blog). I made a lot of great contacts, some of which will likely result in collaborations and/or friendships, and as importantly, I learned a lot about the classifieds industry from people who’ve been working in it for the last 20+ years.

Congrats to Lucie and Shay.

Sorry, that’s a random reference to one of my favorite “dumb” movies — White Chicks from the Wayans Brothers. It’s basically the ghetto equivalent of saying “Bring it on!”or “Let the Games Begin!”

Long story short, News International has invested in a UK property vertical search engine called Globrix. A few key facts:

• The investment was for “a multi-million pound funding round”. Combined with the valuation that Properazzi got from Mangrove just for the initial idea of a vertical search engine a couple of years ago, it shows that the property search engines like nuroa are an increasingly interesting area.
• The company, Globrix, still hasn’t launched, but intends to launch during this month. The company was founded in 2007. If you go to their website, you will see that they are still in private beta. This makes me a little better about all those people who asked “When are you going to launch nuroa?” Sometimes the prize doesn’t go to the person who launched first.
• The million-pound investment appears focused on marketing and advertising, as the goal is to make Globrix one of the most trafficked property sites in the UK within the next 12 months. So they’re going to buy their way into being a market leader.
• Globrix’s business model appears to be exactly the same as nuroa’s.
• News Corp claims that the technology is “next generation”, which is simply another way of saying “a web 2.0 property search engine”, just like nuroa. As the CEO of Globrix explains: “Globrix is about answering a fundamental need in this marketplace - creating a Google-style model for the property search industry. By enabling agents to list for free we cover virtually every property in the UK, which in turn provides a hugely compelling proposition for consumers and creates a new opportunity for an ad-funded model.“
• News Corp argues that investments in vertical search are a key part of its digital strategy (it should be remembered that News Corp invested $13.5 million in the US jobs vertical search engine, Simply Hired ( www.simplyhired.com), which Google is reportedly in talks to buy, a fact confirmed to us by a News International representative at a conference that we attended recently. In any case, News Corp appears committed to vertical search. As Clive Milner, Group Managing Director, News International, said: “Through its digital and print media, News International is one of the largest single players in the UK property media market, so this investment is about us remaining at the forefront of what’s happening commercially and technologically. Globrix is set to be a truly disruptive business in the online property search marketplace - it essentially turns the economics upside down and creates an unparalleled consumer offering from an innovative business model.”
• News International invested in a property search engine, despite already owning 50% of the number 2 property portal in the UK (Property Finder — www.propertyfinder.com). As mentioned above, they note that the new technology is the next step forward, even taking in account their years of experience in the classifieds sector, both print and in web 1.0 vertical real estate portals like Idealista and ImmobilienScout.
• All of this despite the fact that the UK property market is one of the most difficult, given the economic power of Rightmove (a valuation of €1.2 billion) and its exclusive control of the real estate agents (the top 3 real estate networks that control about 60% of the market are their original JV backers). No other market in Europe has barriers to entry as high as the UK market or as many strong already existing competitors. By comparison, the France, Spain and Germany are relatively easy — the market leaders aren’t quite as dominant and there are fewer property search engines covering those markets.

I think this is good news for other vertical search players, particularly those of us not focused exclusively on the highly competitive UK market. It seems that Globrix will do essentially the same thing, but will now count on a few million pounds to attack other UK players such as Extate, OnOneMap, Nestoria, Zoompf, Right Move, etc.

More news to come tomorrow about the recent ICMA conference, and the present Web 2.0 conference that I’m attending.

We did it!

After what can only be described as an eventful and interesting year and a half, our website has finally gone live.

In the end, we have decided to launch vertical by vertical, country by country. The goal is to offer a depth and degree of local knowledge that tends to be absent in some of our competitors. We understand that classifieds are extremely local. Not even national in many cases. Extremely local.

A user in Berlin could often care less about the housing market in Munich (unless the move is inter-regional).

Similarly, most home buyers in Barcelona could care less about the various neighborhoods in Madrid. That information does little to inform her search for a property in a few select neighborhoods in Barcelona, and even within Barcelona, if she’s only searching for properties in Gracia and the Eixample Esquerre, she could probably care less about the real estate market in Sants and Sarria (two other districts within Barcelona).

Our goal is to understand what motivates and concerns the user in each key region. Otherwise, it will be very difficult to provide a truly satisfying user experience. There’s a limit to how individualised you can make the search experience, but the goal is to make it feel extremely personalised, and the first step in the context of a real estate search engine is to make it feel extremely local.

So that’s why we have started with two real estate sites: one in Germany (www.nuroa.de) and one in Spain (www.nuroa.es). They’re password protected for a couple of weeks — we’re still correcting a few major bugs like the fact that the search engine confuses Barcelona city with Barcelona province — but we will give the password to anyone who wants it, and we wholeheartedly welcome your feedback. (Please send me an email to gary @ migoa.com, and I’ll get you the passwords.)

Our goal is to launch in the UK and France within the near future, but only to the extent that we can launch something that demonstrates an understanding of how the local markets work. And only to the extent that we can dedicate sufficient resources so that the websites don’t just become cut-and-paste versions in French and in English.

We are the only vertical search engine in the world to include what we are calling “intuitive search”, which essentially means that we integrate web 2.0 aspects (i.e., we integrate relevant real estate blogs, newspaper articles, videos, photos, etc.) into our search results without detracting too much from the central focus of the page — the real estate listings. So if you do a search for “piso Barcelona”, you will get the search results AND in another column you might see relevant articles from the APIs in Barcelona telling you why now is the time to buy, or a study from BBVA about the evolution of prices in Barcelona, plus pics that other users have taken in and of Barcelona, etc.

We think that intuitive search is the wave of the future. The “big” search engines are already experimenting in this area with Ask3D and Google’s universal search. We think that they understand the future of search pretty well, so we adapted some of their insights to our particular verticals.

And such an approach makes sense. We understand that finding the right apartment is often only the first of many steps in the property purchasing process. And it is only one of the many considerations that will determine if, when and how you will purchase your dream home. So our results page tries to figure out what these other relevant considerations might be and provides you the collective insight of other members of our real estate community.

Our refined search features are also pretty cool and are supplemented by the ability to search by tags. And it all works pretty dynamically. So you have many options to narrow down the millions of possible search results into the few really relevant results that meet your criteria. That’s the key comparative advantage of a “vertical” search engine relative to a “horizontal” one like Google — the results should be more precise and relevant with regard to the vertical in question.

Our “official” launches will take place during the month of October at various conferences. We will launch the German site at DemoGermany (the German/European equivalent of the successful US conference). And if all goes according to plan, we will launch the international site at the Future of Web Apps (FOWA) conference in London next week. We’re currently ironing out the details right now with Ryan, but it looks like they’ll give us a few minutes in front of the general audience to make a brief pitch. Both are cool events that will be attended by influential bloggers and press, so it makes sense for us to use them to launch.

And on top of that, both conferences should be cool.

I sincerely believe that the final product reflects the hard work and analyses that went into it. A lot of influential investors and people from the sector have already congratulated us on the interface. And our tech is probably among the best of the current vertical search players. That’s our goal, in any case.

One commentator on Juan Luis’s blog said that we took too long in development, which surprised me given that we took the same amount of time as the original vertical search engines in the US. Our goal wasn’t to put out a rushed and underdeveloped product, or a cut-and-paste version of what already exists in the US. Our goal was to put out something innovative with truly disruptive potential. I think that we have done it.

And as I have noted elsewhere on this blog, Google was the 12th search engine to launch.

The goal isn’t always to be first.

The goal is to be the best.

Particularly in the tech sector, the two concepts are often not synonomous.

Try out nuroa and let me know what you think.

Ever heard of ConnectU?

Neither had I until I read about the lawsuit that they’re bringing against Facebook in today’s New York Times. It’s an interesting addition to the cloning vs. innovation debate, as it shows that both European and American start-ups “borrow” innovations from their competitors. Technology companies exist within a free marketplace of ideas. Facebook, the current media darling, is perhaps an exaggerated demonstration of this reality.

Here are the facts that no one disputes:

• In 2002, Cameron and Tyler Winklevoss, twin brothers at Harvard, wanted to start a social networking site called HarvardConnection.
• In November 2003, they “hired” Mark Zuckerberg, a computer science student at Harvard, to develop the software and database for their site. They never paid him anything but told him that they’d compensate him if the project ever became successful.
• In January 2004, Zuckerberg registered the name “thefacebook.com” (Zuckerberg didn’t invent the name. The “facebook” is what students at Ivy League schools call their student directories.)
• In February 2004, Zuckerberg abandoned the Winklevoss brothers’ project. By the end of the month, he had registered half of Harvard’s student population for his project, and by April his success had spread to other Ivy League schools.
• ConnectU (the Winklevoss brothers’ project) eventually launched in May 2004. They claim that Zuckerberg purposely delayed delivering their technology so that he’d gain a competitive advantage over them.
• Today, Facebook has 30 million users, lots of buzz and is worth upwards of $900.000.000 (the price that Yahoo was willing to pay last year); ConnectU has 70.000 users and the only buzz that it’s generated is largely because of its lawsuit against Facebook.

So the Winklevoss brothers came up with the idea. They trusted Mark Zuckerberg to implement it (at least with the regard to the technical elements). He told them that he would but never actually delivered the promised technology, all while secretly plotting to use the Winklevoss brothers’ concept to create a competitor website.

It sounds like the Winklevoss brothers have a good case, right?

Wrong.

As famed intellectual property professor (and noted proponent of diminished intellectual property protections) Larry Lessig notes:

“The general rule is that ideas are free unless strapped down by contract or patent.”

In other words, the free market — and not the courts — tend to determine who owns a great idea, unless there is a very clear intellectual property protection (like a patent) in place.

No one disputes that Zuckerberg got the idea from the Winklevoss brothers. Morally speaking, he should probably give them something. Without them, Facebook never would have happened, and he’d probably be working as a junior programmer at Google. But he wouldn’t be on the verge of becoming mind-numbling rich before he turns 25. Why can’t he just give them a few million dollars? It seems wrong to say that the Winklevoss brothers are entitled to nothing.

That’s just tacky.

And it certainly makes me reflect a little bit more on the moral implications of “Greed is Good” argument.

But the US legal system is clear: without a binding contract between the Winklevoss brothers and Zuckerberg, the brothers don’t have a case. As the judge hearing the case advised the brothers before giving them 2 weeks to come back with a stronger argument, “Dorm-room chitchat does not make a contract.”

Say what you will about Zuckerberg. He might not be the most morally upright person. But he knew how to spot a great idea and run with it, regardless of who he had to stab in the back to achieve his goals. His cut-throat actions remind me of the best and the worst of the US business culture.

The Winklevoss brothers’ problem is that they were too trusting with what turned out to be literally a billion-dollar idea. If they had gotten Zuckerberg to sign a non-disclosure with a non-compete clause, the case would be entirely different. But telling someone your trade secret — and forgetting to get them to sign a non-disclosure agreement — means that your trade secret is no longer legally protected.

Likewise, if the Winklevoss brothers had paid Zuckerberg for his work — if he had been their employee — they would have some claim to it. But given the lack of compensation and/or employee status, Zuckerberg’s work all belongs to him.

Bottom line: If you have a good idea, don’t trust anyone. People are funny when it comes to money. Try to put everything in writing. Get all of your service providers to sign NDAs with non-compete clauses, or you might find that today’s collaborator is tomorrow’s competitor.

I know that most start-ups think that lawyers are a waste of money, and money is often tight, but as the old saying goes, an ounce of prevention is worth a pound of cure. In other words, it’s better to pay a lawyer a few dollars today, than end up like the Winklevoss brothers, watching a former collaborator make billions of dollars off of your idea.