With the 4th of July week long celebration – it is likely that you have either missed, or simply skimmed the recent news regarding Xceligent’s counter-suit against data behemoth Co-Star. If by chance you missed this news, I highly recommend you read Jon Banister & Ethan Rothstein’s article in Bisnow from June 28th.
This legal battle of heavy weights has the feeling of Tyson vs. Holyfield – or more current, McGregor vs. Mayweather. But really, we may be looking at a decision that boils down to monopoly vs. duopoly.
Here is a quick summary: Co-Star originally filed a suit again Xceligent for intellectual property infringement, as well as a myriad of other claims. Now, Xceligent has filed a counterclaim against Co-Star, accusing Co-Star of numerous offenses – including violating imposed restrictions the FTC placed on Co-Star in 2012.
The general feeling in the market is that Co-Star is a monopoly. Can’t live with them (the service is deemed to be expensive), can’t live without them (the information, although not completely accurate, is easier than doing it on your own). Note, I said easier – not necessarily better. Xceligent does not have the same coverage – but this is changing (or at least Xceligent is attempting to change this) pending the settlement of these suits.
The outcome of these claims, and the ultimate decision by the courts – will provide you, the commercial real estate broker, with one career-making lesson.
[Tweet “”The best commercial real estate brokers understand that they are in the information business; and that real estate is simply the mechanism in which they leverage this information.””]
Years ago, one of our coaching clients, Bob Knakal (Chairman of NY Investment Sales for Cushman & Wakefield) told me that he was not in the real estate business. Imagine the look on my face when one of the world’s top producing commercial real estate brokers says this. Bob then, correctly, shared with me that he was in the information business. In fact, Bob built his company (then Massey Knakal) based on their deep understanding of their market and all NY City submarkets. Bob, his partner Paul, and their 100 plus brokers did not use Co-Star. They had more accurate information themselves, and couldn’t justify giving away their information simply to buy it back. Xceligent was not in the market at the time so they were not an option (Xceligent has now recently entered NYC).
The original ideas by Andrew Florence (CEO of Co-Star) and Doug Curry (CEO of Xcelligent) of providing a portal where information can be collected and shared has transformed the commercial real estate industry. The evolution of this idea has, unfortunately, evolved into a series of legal battles that will ultimately determine the efficiency of most commercial real estate brokers.
The key point here is: the best commercial real estate brokers understand that they are in the information business; and that real estate is simply the mechanism in which they leverage this information. Information is paramount. Most of commercial real estate brokerage has become dependent on third-party providers for their information – the demand is incredible, if not insatiable.
Top producers, however, do not rely completely on third-party sources. They validate, confirm and/or originate their own information.
There may be a winner in the Co-Star vs. Xcelligent battle. The courts may find Co-Star to be a monopoly, or they may find Xcelligent to infringe on Co-Star’s patents. Ultimately, one or both of them (or even a new player) will find a better solution for the market; where information can be exchanged at a fair price, and open for the entire market to use as they see fit. Regardless, it will always be the individual broker (or brokerage firm) who leverages the information best – that will be looked at as the market leader.