My thanks again to Styldod for sponsoring this month’s Vendor Alley. And now you are in for a special treat, a guest blog post from the SVP of Industry Relations for Styldod, Todd Carpenter.

Disruptors and Institutions

I’ve worked for two small mortgage brokers, three giant mortgage banks, three tech startups, a venture capital firm, myself, and one of the most powerful trade groups in the world. I’ve also mentored over 100 PropTech startups during my career.

In that time, I’ve found that small organizations are often at odds with large ones. I’ve seen it from both sides. Small organizations tend to disrupt; large organizations tend to build barriers that squash disruption. A big mistake each side often makes is overlooking the advantages of working together.

If you’re a vendor like us, with a disruptive idea, I suggest you learn as much as you can about the institutions you are about to innovate around. Why is their business model dominant? How did they get there? What resources do they bring to bear?

If you still think you have a great idea, look to see if someone has tried to implement it in the past. Spoiler, someone probably has. If they failed, ask yourself why. Even better, ask them.

You’ll find that institutions have tremendous momentum—like an aircraft carrier. Their inertia makes it hard for them to change course. You may feel like this is an advantage because you are small and fast, like a Jet Ski. You can adapt and course-correct easily. You have almost no one else on your boat who needs to adapt with you. Your Jet Ski can turn much faster than their aircraft carrier.

Institutions are slow to change. Their past success is their inertia—it pushes them to stay the course. That could present an advantage for you. Or maybe not. Just remember that once they do change course, they still have an aircraft carrier.

If you align yourself with an institution, you might become frustrated at how long change takes, but you also gain the benefit of their momentum, and can trust that their reluctance to change means they’re unlikely to shift course again—this time to a position that no longer benefits you.

Cooperation is good for the institutions as well. They have inertia, wisdom and resources, but are often lacking the ability to innovate quickly. While working for NAR, I helped implement the new CEO’s shift to. “Not Invented Here.” The initiative was to stop building products that compete with startups and start welcoming more of them into NAR’s tent. Through the iOi Summit, the REACH Technology Accelerator, and Second Century Ventures, we built a network of industry-aligned innovators who viewed the association as an ally, not an enemy. CRMLS created Venture MLS for similar reasons. They invested their inertia, wisdom and resources into our startup, and helped us find the ideal way to align ourselves with the industry.

At Styldod, we use image manipulation technology and artificial intelligence to help agents present homes in their most favorable online light. Positioned incorrectly, this technology creates annoying problems for multiple listing services—especially around compliance and disclosure. So we built a product that reduces headaches for MLSs instead of creating more. The MLSs we’ve worked with see us as a benefit to their subscribers, and a direct benefit to their staff. We help their compliance officers eliminate many of the time-consuming mediations that occur when agents upload problematic photos.

Many of the startups I’ve mentored take for granted how much heavy lifting MLSs do to create a consumer-friendly user experience. Our product is designed to enhance one of these institutions greatest strengths; providing the gold standard of real estate data to their partners.

Companies like Redfin, CoStar, NewsCorp, and nearly every real estate broker in the U.S. depend on this gold standard to market listings. Even Zillow, once seen as adversarial to organized real estate, eventually pivoted to align with MLSs. Proptech founders may want to take note.

If your new startup is built on the idea that an MLS, a portal, a brokerage, or an association is bad, it gives me no great pleasure to tell you that your product is likely to fail. These institutions are strong for good reason. If your business model is built on the belief that REALTORS® get paid too much, your business is also very likely to fail. Argue with me all you want—there’s a giant graveyard full of terribly spelled URLs from the out-of-business disruptors that preceded you.

If your business model is based on the idea that an institution’s processes can be improved, their time and money can be saved, or that their consumers can be even better served, you have a good chance. If this is true, think about how you might collaborate with these institutions to move forward.

That’s what we did.

-Todd Carpenter