In our April 2011 issue, I spoke with Bill Chee, CEO of Prudential Locations. During our conversation, we spoke a lot about the old MLS (Multiple Listing Service) system and its road to digitization. We also spoke about the threat from Microsoft, and paying attention to your customers. Here’s the interview in its entirety:
HB: Can you tell me about automating the MLS?
CHEE: We actually automated MLS before it was automated. So what happened was, MLS was in a book form and we took it to a computer database – an application that we developed ourselves – which was a simple search of search parameters and things off of the database. And that was like magic in those days. … Before that it used to be a 5 by 7 card. And that’s how MLS was distributed. So there was a piece of paper with a diagonal picture in the front and on the back, information of the property. We received it a couple of times a week. You’d get it and put it, it was the size of a shoe box, so you’d put it in there by tax map keys, so you’d arrange it and that was the first MLS.
HB: Who pushed for digitizing?
CHEE: Well, we actually did it on our own. This wasn’t the community. This was our company. This is before anybody thought of information as valuable. So what happened was, there was a MLS vendor who was printing all these books and what not and they found a new vendor. So I flew up to California to meet him and I bought all his punch cards. In those days, information was carried on punch cards. We bought all of those, which consisted of all the sold information, all the features, and brought them back on the plane. It was just boxes and boxes of punch cards. And then we loaded them into the computer system.
HB: Were there personal computers at the time?
CHEE: There were none. The computer we had was bigger, wider than this desk and about this high. And it had memory, it was like 256 kb. It came in big disk packs.
HB: How did it affect your company?
CHEE: It had an amazing effect on the company. I remembered I moved out of my office and we put the computer in there – that’s how big the computer was, you had to move out of your office – and then people would come in and they would say, you know, fairly commonplace things, like, ‘I want to see what’s in Hawaii Kai, three-bedroom, two-bathroom.’ The computer would print it out. And in those days nobody really was exposed to automatic printers, so they were shocked. They were totally fascinated with the printer because it was a matrix printer that printed backwards and so everybody got so intrigued by that and the whole process. And it was a time we could show people, we could eliminate things, so they could make a decision by saying, ‘I want to see all the houses in Hawaii Kai,’ and that would be like a hundred. And then they’d say, oh, let’s just look at the bigger ones, then let’s look at the ones with the bigger lots, and let’s look at the ones that are fee simple instead of leasehold, because we used to have both. It would eliminate their thought process in terms of what to go and see and by the time you took them out. What happened was they felt they could make a decision having gone through that process. So the computer helped the decision making component that a typical buyer might go through, where you’re totally confused in terms of what the market is offering, and you spend a half an hour and you think you know the market because you just saw the whole thing. … That’s how we grew so fast. We went from 1970, which was our first full year, to 1981, I think we became the No. 1 broker. And much of it was driven by automation. What happened at that time is we attracted a lot of young guys. In our shop, the older guys still remember the day we hired a guy who was 46 years old. ‘Oh, what are we going to do with this guy?!’ It was like, you know, what are we doing, hiring a guy that’s kind of bald, older. … It was kind of funny because I was 20-something years old. It was different then.
HB: Were into technology back then?
CHEE: Well, it’s not the same way that you get into technology now. Now everybody is into technology. If you’re not into technology, you’re not of that generation. In my generation, if you were into technology, that meant you were taking coding classes at IBM and you were actually coding and compiling applications and you were trying to write things. So we wrote our own search app. They weren’t modules you could buy and plug in, and stuff like that. It was a lot more tedious than it is now. Now, I think it’s more you need to know about the concepts and how they apply rather than how to code something so it will do something. You can buy all sorts of kits to make it happen. So technology was very different then. … Yeah, I was involved on the coding side, but that was only out of necessity, we couldn’t hire anybody, so it was just grinding through it. Eventually, we started hiring people that were good at it.
HB: So no more coding today?
CHEE: I can’t code at all now. And I’m not sure the guys involved with technology can code. They’re more interested in understanding the data, how it interacts with clients or that kind of stuff, but not necessarily the technology.
HB: What about today? Do you have a department for this?
CHEE: We do have a data warehouse. It basically carries every sale in the state, track every agent in the state, every owner in the state, we track every building, we track separately 250 neighborhoods. So what’s happened is technology has let us kinda go wild in terms of what it is. Now the challenge is not necessarily the data, it’s how do we interpret the data, how do you give it to the right buyer at the right time, how do you format it, so there’s all this interpretation of data. So it’s not data collection or housing. All of those issues are gone because technology has gotten so much better. So now it’s how do you use it. Its utility brings value. It has no value except for its utility.
HB: Why is it important for people to adopt new technology, who might be on the fence?
CHEE: On the fence on technology? I don’t think, I don’t really know, maybe I don’t hang around the right people, but I don’t know of anybody who is successful in their business that hasn’t adopted technology. Even if they don’t view themselves as a technologist, they’re totally dependent on it. It used to be, I showed my mother the first portable computer that had a modem, stuck it in. She was just totally freaked out. She was actually frightened and had to leave the room. That’s the conversion. Today, everyone has a phone. Everyone has a computer. Everyone has access to the Internet. And I was in the middle of the time that real estate information hit the Internet back in the early ‘90s. We were frightened because a lot of the thinking about technology is, ‘You’re in it or you’re out of it.’ You know, that kind of thought process. And then the concern was Microsoft might take over our business. We fought off Microsoft, we met with them, we had all these meetings, and we thought they were [going to take over] too. … We have a really simple company mission. Our mission is to prosper by giving our real estate agents and their clients, we used to say an unfair advantage in the market, we still think that but … and we try to do that all the time. Everything we think about, how do we get that real estate agent or that consumer to a point where he has an advantage over everybody else. And that drives our mobile computing stuff. So you can drive around, see something, hit a button, here’s the information. Those kinds of things help him make a decision. So we started what we call customer tools, which was most automation was reserved for the real estate professionals. I guess in about 2004 … we started developing specifically for the customer. Their viewpoint is a little bit different. When they enter the web site, it’s a little bit different. They view things because it’s kind of a part-time job for them in looking for a house, they view things in a totally different way. A lot more photos, a lot more graphs, things like that that can help them draw a conclusion.
HB: The other thing I wanted to talk about National Association of Realtors. How did you get to become president of the association?
CHEE: There’s 1.2 million members. And they go through an elected process. It’s somewhat political. But mine got started because I was involved with some other guys and I really felt passionate about how the association served the members and that they should be returning things to the members and they should be doing whatever. Using that platform, I got more and more enthusiastic about it. And it kind of took me by surprise because I thought I was dealing with a movement of some sort and I ended up in the presidency. Very odd, though, because it was all haole guys, they were all older, middle aged. When I first joined in ’76, the association, it was basically middle-aged haole guys with big bellies. So, the interesting this is they all knew my name because I was the only guy different from them. … What happens is there’s a national association that charters a state association, and a board. This is the governing board for realtors. … I was president of the state association in ’76. I was 30 years old. And then I started going to these national things, that’s how I got started.
TRACY BEHLER, EXECUTIVE VP OF CUSTOMER RELATIONSHIP DEVELOPMENT: Wasn’t one of the reasons why you you stood out was because of your thoughts on technology?
CHEE: Yeah, it was interesting because I led this movement into technology for the association, because it was, I remember standing in front of a group and telling them, ‘United Airlines knows more about me than you do and you’re an association and I am your president,’ because United Airlines stared tracking mileage and they would want to know what you preferred, what you didn’t. They kept track of you, they knew what your preferences were, they knew all that kind of stuff. And here I was heading an association, which is supposed to be serving members, we couldn’t tell who had what experience, who was doing well, or who wasn’t, who was good at automation, who was good at legal. We had no knowledge of that. So we started this process of moving the association into learning about it. It’s really an information movement, but the only way you can do it is through automation. So it was more about knowing your member better, knowing your customer better, taking surveys. And we do the same thing here. We don’t tell customers what they should do. We survey customers and then figure out what they’re doing, and then we do it, so we have an opposite thought process. But then, right around that time, the Internet came out. Then that’s when we got into, I wouldn’t say they were fights, but we got into some disagreements with Microsoft and some other people because they thought the business was very easy and could be automated. In part they were right because they automated the travel business. Even while they were talking to us, they were trying to break up the travel business, which they did very well. In probably a 5 year period, they changed the life of travel agents, from selling tickets and doing all that to putting them out of business. The whole role changed. I was at Microsoft as a guest and I saw a big thermometer, like a goal, and I asked, ‘Oh, what’s that for?’ ‘Oh, that’s nothing, we’re trying to raise some money.’ And Microsoft, at the end of every hall has all these free soda machines, and I went out and I saw an engineer there and I said, ‘What’s that for?’ And he said, ‘We’re kicking the ass of the travel agents.’ Now I figured out why I was there – because they were trying to kick the ass of the Realtors.
HB: How do you guys survive where the travel agents could not?
CHEE: Well, what happens is this is much more complex business than the airline ticket. So what’s subject to automation is something in which you can have a standard product. An airline seat is a standard product. You know for that same seat you can go into a plane and you can find people paying six different prices for the same seat, because it’s marketed and delivered in a different way. What Expedia did and Travelocity, Cheap Tickets, and those guys, what they did was they streamlined that process because they understood a seat’s a seat, especially if it’s an empty one. And airlines were ready to relinquish position because Orbitz wasn’t there yet, so when they went into the market they were streamlining how they got seats to people and they were all the same seat.
The problem with real estate is you go county by county, state by state, it’s different in terms of how you sell it, how you transact that, what process you have to go through, all the information was spread out. This was years ago. We started our own site, which ended up being realtor.com so the professional realtors took over the primary Internet seat for housing information. At that time, Microsoft was out there trying to buy listing information. And this is the true time when information becomes the Information Age where people are openly acknowledging that information can be purchased, can be sold, has a value. There was always talk about the Information Age 10 years before, and it was just conceptual. But there was never any real bargaining over it, trying to copyright it, and trying to hold it in. And that’s when the wars really started in terms of who controls what information, how current can it be. And at the center of it was this consumer, who said, ‘I want it.’ Whoever had it, I don’t care who it is. ‘I don’t care if you’re a long-standing association or Microsoft, just give it to me.’ …
Well, there’s still some innovations being tried. They haven’t succeeded in a very large way. So you have these Zillows, and these others trying models out, but you notice they come out with a big flash and then they kind of just disappear. And one of the reasons we think is, if you’re going to spend much more than your life savings on a house, there’s a whole bunch of reassurances you want to have. You may do research, but at the end of the day you still want to see the doctor if he’s going to function. … It’s kind of the magnitude of the decision that we always say our business is based on a foundation of trust. Who’s going to spend $500,000 on something with somebody they don’t trust? Or who’s going to do it over the Internet? We have a great web site, we have thousands of people coming into our web sites, but we don’t sell property over the Internet. They don’t come over and say, ‘Gimme that one,’ and we say, ‘Thank you very much,’ and then go. That doesn’t happen. So all of the analogies that have been made between buying something off the Internet and buying a house are simply not true. They require a human touch and an experience that warrants the amount of money they’re spending. I go on the Internet and if it’s five bucks for it, I’ll buy it, I don’t care. Low risk. The biggest thing I bought I think this year was a TV stand, I think it was $1,800. They shipped it in, they have guarantees, I mean they’re learning how to do that, and they didn’t have it here. But it’s not $700,000 and we’re going to have the mortgage for 30 years, and my kids are going to drive back and forth. I mean, it’s a TV stand.
HB: How has your role changed over the years?
Well, I’m not doing as many things on the ground. I told you I was the code writer, so I was doing everything. And what happens when you’re younger is you can go for a very very long time, just grinding, and you don’t think of it. You don’t think of vacations, you don’t think of anything because you’re just immersed. And your body holds up well. You know, you just go and go and go. In those days, networking was done all in the bars – and still is – but you were always on the go, always drinking, always meeting people. Now you can’t do that because right around 40, 45, you still think you can do it, but you can’t do it for a prolonged period of time and so other things just start to slow down a bit. So my role has been not as much time in and not as much intensity in terms of having to do it in the office and do it outside and just do it, and then to communicate it to everybody and come back and redo it again. Now we have spread out contacts, people know other people, it’s not just focused on me, so the whole role has changed. They do better when I’m not here.
BEHLER: Sales go up.
HB: You should have a remote office.
CHEE: I have a remote office. These days, you have a remote office, right? You’re always reachable, you’re always there, so you don’t really have to be there. You just have to achieve things. But if you’re not achieving, you better be in the office just in case, so they think you know what you’re doing.
HB: Any other advice?
CHEE: You know, it’s been really a long time that I’ve been considered upwardly mobile. When I was younger, I would be recruited all the time, headhunters dealing with me, exploring everything, changing everything. Now it’s much more simple to me. It’s implementation, it’s based on a few foundational things, keep your eye on the ball. It’s hard, but it’s not that hard. I’m so much more relaxed than I used to be. I think it’s really still fun. I love this job because it changes all the time and it doesn’t get monotonous. People change.
HB: Why did you start the company? Were you working at another firm?
CHEE: I was working at another firm but it was totally different in terms of real estate. The real estate contract when I started was one page and it was printed on one side. That was the whole contract. Now it’s something like 50 something pages. So when we were doing it it lacked the discipline of today’s world. The only reason that we did fairly well was we believed people deserved the information to make a decision, which wasn’t necessarily a thought. In those days, it was you got the realtor, you trusted the realtor, you buy what he tells you. It’s like the doctor. In the old days, the doctor said, take this you just go, ‘Yeah.’ Today, the doctor says, ‘I think you have this,’ you look it up on the Internet, check out all the medications, then you go back and you tell him, ‘Well, I’m not sure about this one,’ because it’s interactive. So what’s happened is this has become an interactive business. Somebody doesn’t just say, ‘Tell me what it is.’ They want to research it themselves, they want to get the kind of site that works for them, they want to have information compiled, they want to have all sorts of things. It was fairly a simple business. It was almost a personality driven business. If people like you, it was good. Now, the customer’s changed to such a degree that he insists on information, he insists on it now, he expects a phone call back right away, he expects to know accounts (or the town?), he expects to see graphs. He just says that’s the way to do business. There’s still people who are personality driven and may succeed for awhile in the business, but you can’t do it as you did it before. When we started in the business, our boss had no interest in doing any of that stuff. We were trying to draw graphs of neighborhoods and he’d say, ‘What are you fooling around with that stuff? That’s so stupid.’ And our thought was, you know, there’s hundreds of millions of dollars that nobody has information on. And we thought what a weird business. So we’ve seen it evolve from very very little information to almost too much information. And now it’s trying to get back to what’s the key information, how do I deliver it. It doesn’t lack from information, it lacks the ability to assess the information. So that’s what we’re trying to do, how do we get somebody to understand the marketplace, like this little neighborhood, in minutes.
HB: You were talking about listening to the customers and strategizing from there. Why take that course instead of “Do it my way?”
CHEE: Well, if you look around, we’re in a capitalistic environment. You can’t change that. We’re not going to become communists, or socialists, or anything like that. And capitalism means the consumers rule. Basically, they’re looking at the marketplace. They go in one direction, and they do it at their will. If you understand that, that’s why you survey them because you’re not the one in control. I mean, you’re in control of what you do for them but it’s certainly better to know if they’re going to Waikiki I’m going to stand on this street corner because they’re going by. But I don’t tell them, ‘Don’t go to Waikiki, go over there.’ They don’t listen to me. They do it a different way. So, you know, they rule. We have a simple statement: Customers Rule. They’re in charge and they decide. But you look at the Internet evolution, right? We were going through it, we were writing applications, we were delivering it out there, and we said, ‘Oh, nobody buys a house through pictures.’ And that was right. But when we did a focus group, someone said, ‘How do I see this house?’ And the guy says, ‘You don’t do it that way!’ Then we understood that they thought that was the way to buy it because the guy was 28 years old and he said, ‘I want to see this house.’ Now, he didn’t buy that house but he started the process of going through it, so that’s how they wanted the process. If you ask my father, he would say, who was in the real estate business before, that’s stupid. Nobody’s going to buy a house by looking at a picture. But you start the process by looking at a picture. You know, some of our clients, because they’re younger, they can get on computer systems and our systems and our database, and they will know more about the area that they’re interested in than an experienced broker in the business for 30 years. And I’m talking about one day. Less than one day. It’s just information access. And if you’re not the guy giving it to them, after awhile, he has a different loyalty.
HB: So the Realtor’s role now is to give that information to consumers?
CHEE: A lot of times, we’re asked to interpret it as well. But today’s customer likes to have full access, show me everything. Same as when I had the computer in the room years ago, where he wants to see everything in Hawaii Kai. Same thing, but now he doesn’t want to have to come into the office. It’s off the Internet. He drives it that way. Same process. I want to see everything first. This is a big purchase. I want to feel comfortable making the decision. And if you can take him through that process, he can make that decision faster and smarter than anybody else.