Technology Struggles To Disrupt Certain Things

A key takeaway from Zillow's failed home buying program

Earlier this month the online real estate marketplace Zillow announced it would close it’s home-buying business. The surprise is that this occurred during a record housing market. Many had pegged Zillow as the one stop shop of the future for home buying and selling. What many overlooked, including me, was the local insight and knowledge needed in this industry.

This is another example of the large number of customer facing, advice and consultative based occupations that have been attacked by technology disruption for many years. But they all run into similar roadblocks.

Algorithms and AI technology struggles to replace the human interaction element of advice centered occupations. It’s hard for computers on opposite sides of the country to be able to accurately tell what a home in a rural midwestern city or village should sell for. How do those computers have an advantage on the local realtors who know the ins and outs of that local market? They don’t and Zillow’s struggles reflected this.

Industry disruption where client centered advising and consultation remain an extremely hard nut for computer algorithms to crack. The more complex or more you have at risk, the more likely you’re going to seek out expertise from a trusted or local advisor.

Think about the following.

  • Financial Advisors

  • Real Estate Agents

  • Accountants

  • Insurance Agents

  • Lawyers

  • Doctors

  • Auto Dealers/Brokers

All of the above are available online in some form to consumers. How many of you use the online based company options for these services?

Think of the relationships you have with the above listed roles in your life. You may have developed a sense of trust with certain individuals in these jobs. Your loyalty may be with them over the company they represent. You’re doing business with someone you know and trust. Technology has a very tough time replacing that. Yet that’s what they have to overcome and convince you not to value.

The online versions may be available but that doesn’t mean it’s the best option for everyone and every situation. Some do prefer not to see or speak to anyone. So an online centered relationship will suffice. Some may not mind feeling like just another number or never dealing with the same person. That’s where the options of online and more disruptor based options offer appeal.

But for many others, it’s hard to replace the human touch. Law, policies, the tax code etc. are more complex now than ever. People rely on professional advice and help. Getting advice from people who you can actually speak to is more valued and at a premium now more than ever. A lot can be said about familiarity and knowing who you’re talking to or working with.

The challenges to disrupt something and be successful is two fold. First you need to have a technology that is better, faster and cheaper to operate than the traditional industry model. Second you have to be able to scale that new model to convince people to abandon or change their current way of buying that product or service for the new way. For many that means abandoning the localized option they use now. You’re trusting online technology based platforms over individuals whom they already have relationships.

People do business with people they know and trust. It’s people they see in the community. It’s people you recognize that create a sense of safety and comfortability. If I have an issue I know where they are located. If I need to go speak to them, I can. This holds local community based businesses to a higher standard. They have to answer to you. You could cross paths at any moment at the grocery store, school, community event etc. Facing an upset client in person is much harder than an over the phone or email interaction. Consumers know this. You know this!

There is no end in sight for localized businesses with high quality advice and service. It’s tough for any computer model to duplicate or much less top in person, local face to face service and advice. If that is what someone values and desires there is no amount of technology disruption that’s going to change their mind.


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