Cookie/Privacy Notice

The Real Estate Philosopher


Three Words That Might Change How You Look at the Real Estate World

Feb 19, 2016

I will get right to it – here are the three words:

“Competition is Evil”

Competition is a truly horrible and terrible thing and should be avoided at all costs! All competition does is destroy your profitability, as we all no doubt remember from our first year economics course in college. Indeed theoretical “perfect competition” reduces everyone’s profits to zero.

The goal in a real estate business – indeed in any business – should not be to "compete" with your “competition” but to do something different.

I didn’t make this up. This comes from just about every deep thinker in the business world:

Peter Thiel, who started PayPal and is now a Stanford professor, gets credit for coining the above phrase – and I heartily recommend his book Zero to One, which delves deeper into his thinking.

The late Peter Drucker, who I mentioned in my first article, and will no doubt quote again as he is one of my personal heroes, says one of the two most critical things for a business to do is to “innovate”, which is the essence of avoiding competition, as the whole concept of innovation is something new and different.

Michael Porter, the Harvard Professor and guru of competitive analysis, says that the biggest mistake businesses make is “trying to be the best” and beating their competition. Instead, he advises, the goal should be to create something new and therefore create value for your business. Indeed, as Porter points out, if you become “better” than your competition, all this (usually) means is that your customers, employees or other parties in the industry benefit, as opposed to your business benefiting. His definition of competitive advantage is instructive:

“Competitive advantage depends on offering a unique value proposition delivered by a tailored value chain, involving trade-offs different from those of rivals, and where there is a fit among numerous activities that become mutually reinforcing.”

Note the key words “unique” and “tailored value chain” and “trade-offs different from those of rivals”.

Seth Godin, who is a more eclectic, but in my view also a brilliant thinker, writes an excellent and easy-to-read book called Purple Cow, which emphasizes a different variant of the same thing; namely, how important it is to STAND OUT, like a purple cow would stand out, as opposed to fitting in and being forgotten.

And there are other books I have read as well by brilliant and creative thinkers. They all say versions of the same thing; namely, that it is more critical to be different than it is to be better.

So I urge you to sit down – with a bottle of single malt scotch (if you have my taste in liquor) – have a couple of snifters – turn off your iPhone or other machinery – and have a good look around at what you are doing in the real estate world. Consider:

  • Are you doing what others are doing?

  • Is your day spent trying to figure out how to be “better” than others?

  • Is what you are doing “different” than others somehow – possibly in the way you do business, the way you treat and incentivize employees, in what you offer to customers, in how you build your product, in how you use technology, in how you lend out money, in how you invest money, or in any other way? Or is your entire business exactly like someone else’s?

  • How much of your time spent on analyzing your business strategy is spent on thinking about macro things that are really in the nature of trying to time the market or the cycle with your crystal ball?

  • How much of your free time is spent thinking about how to be different?

  • Have you read any of the books I have mentioned above?

If the answers to the above questions lead you to the view that you aren’t really trying to be different and instead you are trying to do things better, then my guess is that on a risk-adjusted basis, your returns are more like to be average than to out-perform.


Point of Interest from Duval & Stachenfeld LLP:

We at Duval & Stachenfeld have become believers in the view that the technology changes sweeping the rest of the industrialized world are finally going to have a significant and perhaps dramatic impact on the real estate world. For this reason we have formed a Real Estate Technology Group at the Firm.

This Group will do the following:

  • Assist real estate technology companies by arranging for connections between real estate technology entrepreneurs and our extensive contacts throughout the real estate industry. 

  • Assist our clients and business relationships in enhancing, improving and protecting their business models with connections to high-quality real estate technology entrepreneurs.

  • Help real estate technology players get started. This will of course include legal representation; however, for select parties, it may also include the ability to have office space (free of charge) in our Hedgehog Array (incubation space) at 555 Madison Avenue.

If you are a real estate technology entrepreneur, or if you have a friend in this space, I encourage you to reach out to me to see about synergies with our new practice.

Archived Posts

Subscribe

Tags

Real estate
Peter Drucker
Michael Porter
Power Niche
Brexit
Innovate
Creating Value
Capital Providers
Five Forces
Competition
Peter Thiel
Seth Godin
Uniqueness Challenge
London
Different

As the Chairman of Duval & Stachenfeld – a law firm in mid-town NYC known as The Pure Play in Real Estate Law – I am inviting you to join The Real Estate Philosopher™. This will consist of my thoughts and also thoughts of friends and colleagues.

It will not be published in any traditional media – it will go only to friends of our firm. The purpose here is very simple – to put forth thoughts in the real estate world that are different, provocative, and challenging of accepted wisdom. Hopefully, nothing said here will be mainstream thinking.

You may be wondering how I am qualified to write on these topics since I am “just” a lawyer. However, I have an unusual place in the real estate world. As the Chairman of The Pure Play in Real Estate Law (one of the largest real estate law practices in NYC), I interact with an incredible number of real estate players. This ranges from small real estate shops with nothing but a gleam in their eyes, to some of the largest real estate institutions in the world, and everything in between. This gives me a unique and global perspective and allows me to act as an amateur philosopher in the real estate world. This has always been my hobby and it is what I love doing.

Regards,

Bruce Stachenfeld
a.k.a The Real Estate Philosopher™

twitter linked

Neither the content on this web site nor any transmissions between you and Duval & Stachenfeld LLP through this web site are intended to provide legal or other advice or to create an attorney-client relationship.In communicating with us through this web site, you should not provide any confidential information to us concerning any potential or actual legal matter you may have. Before providing any such information to us, you must obtain approval to do so from one of our lawyers.

By clicking "ACCEPT" below (and thereby choosing to communicate with us without such prior approval), you understand and agree that Duval & Stachenfeld LLP will have no duty to keep confidential any information you provide.

Accept