Roger McNamee: Money Talks

This private-equity investor is betting millions on REALTORS®’ technology future, even as the competition intensifies.

September 1, 2006

Your firm, Elevation Partners, made a $100 million investment this year in Move, the company that operates REALTOR.com. Why?

MCNAMEE: Two reasons. Obviously, we’re excited about investing in Move, but we’re also excited about partnering with the NATIONAL ASSOCIATION OF REALTORS®. The World Wide Web will be, forever more, a core feature of the real estate business. And NAR leaders understand that. They’re committed to embracing the Web, and they’re committed to a partnership with Move that will give practitioners a chance to remain successful as new modes of doing business emerge.

How does the Move investment fit the mission of Elevation Partners?

MCNAMEE: We focus on the intersection of consumer media and technology. Now, you might say, “Wait a minute. Real estate isn’t media.” Well, information is media and the real estate business is a very information-intensive business. In that respect, the real estate industry looks just like every other media category. Like traditional media, real estate professionals are struggling to deal with the impact of the Internet. We’re financing the technology that will enable practitioners to make the best of a rapidly changing environment.

What’s it going to take to stay in the game?

MCNAMEE: Real estate professionals need to recognize that it’s too expensive and too complex to compete in the realm of Internet technology. They need a Web site, but they should leave the evolving technology to people who do it full time. The Web is the world’s best research tool, and consumers are taking advantage of it. They want to know everything there is to know about a house, its neighborhood, and the broader community. And they want all that information on a single site. Somebody is going to be the Google of real estate information, and it’s not going to be a broker.

Your book, The New Normal (Portfolio, 2004), describes how technology and other forces are changing the competitive landscape. How specifically do you see that transformation occurring in real estate?

MCNAMEE: The real estate business was built on proprietary information, but the Web has made it difficult for practitioners to maintain a proprietary hold on information. What practitioners need to do now is to enhance and better communicate the value they bring when consumers buy or sell a home. Practitioners can be a trusted authority on how to systematically improve the value of a home during the seven or eight years a family lives there. Those who can figure out how to do that are going to prosper.

What challenges exist for practitioners trying to achieve that vision?

MCNAMEE: Changing a business model is really challenging, but it’s a lot better than going out of business. There are dozens of new Web sites trying to compete with practitioners. Among the best online weapons practitioners have are Move and REALTOR.com. If there’s a void in the information Move and REALTOR.com can provide, then consumers will spend less time on Move’s sites and more on competing sites. The Internet creates huge business opportunities for real estate professionals. The beauty of the relationship with Move is that practitioners won’t have to do the technology work themselves.


For more about McNamee and Elevation Partners, visit www.elevation.com.

Chuck Paustian is a former REALTOR® Magazine senior editor.

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