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Stocks Z / ZipRealty
|Subject: Water's fine...||Date: 11/27/2006 5:32 PM|
|Author: Har1en||Number: 19 of 34|
Took the plunge last week and opened a small position. Looking at my holdings this morning, I realized that this is the smallest company that I've ever owned. I actually own just under .001% of this thing. That's weird. I have a feeling it's going to be a bumpy ride, but I'm going to hang on for a while.
I subscribed to Netflix years before I considered the stock. I heard about eBay from dedicated users years before I bought the stock. I loved Pixar movies years before I considered owning the company.
While I made good profits on each of those investments, I missed out on years worth of compounding and appreciation.
When ZIPR went public, I waited -- it looked a little expensive. Housing was turning down -- back then most consumers believed housing would expand forever. A few naysayers knew what was coming, and I watched and waited.
Today, according to the press, our homes are worth pennies on the dollar, and there's no bottom in sight. Real estate is dead, and speculators are disgorging homes bought with four interest only mortgages at a huge loss. You've heard the stories: how Japan has had declining home prices for decades, and our mortgages are going to crush us.
So, with hope in the future of our country's entrepeneurial spirit and our national government's home purchase subsidy system still firmly in place, I'm backing the horse that has what Netflix, eBay and Pixar had way back when.
1) Great brand respect. Not everyone has heard of ZIPR (and that's great for me), but people who have are very happy with their service, and recommend them to friends. The agents are courteous and respectful because their paychecks don't go up as the buyer pays a higher price, so they can actually help you negotiate a lower price without worrying that their commission is going down every time you drop your bid. (Read Freakonomics for an in-depth analysis of what a negative incentive that 6% fee off your home price is!)
2) A new idea: agents without offices! Reduced overhead? Tax credits for employees who work out of their own home offices? What's not to love?
3) An old idea: great customer service. They measure it, they ask about it, they stand behind their brand, just like Netflix and eBay. They know it's a new idea, they know people aren't entirely used to new things, so they go out of their way to comfort you as a customer.
4) Parasitic marketing. I believe the CEO of Wells Fargo (WFC), Dick Kovacevitch once said that "the best ideas are stolen ideas." Go back a few articles in this newsgroup and you'll see that ZIPR uses other brokers' listings to advertise for themselves, or at least that's the perspective of some members of the broker community. Those brokers want more views from customers, but they don't want ZIPR getting the referrals from buyers. They want their cake and to eat it too. Too bad. Looks like ZIPR gets lots of referrals that way, and how could they not? According to their conference call, most brokers ignore their online interest and traffic. I've experienced this as a customer. ZIPR is on top of all contacts: they make every one count. And they 'borrow' their content from the MLS, which isn't going to change soon. There's too much at stake for the seller agents. They can't sacrifice any sales in this environment.
So, now it's a race. If ZIPR can create a large enough presence fast enough, they could be a 20B$ company in ten years. Yeah right... but we can hope!
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