Radical CEO falls on the sword after an admirable try at the impossible

The end of Scouting Reports?

Only four days after the launch of Scouting Reports by real estate brokerage Redfin which published Realtors’ performance data on their site, the company has announced that they are permanently ending the reports.

On their blog, Kelman wrote, “Redfin just took down Scouting Report 1.0 for good. Our latest problem was that the data we used for Scouting Report had problems at the source that weren’t easy for us to fix, mostly because agents work informally in teams, or sometimes don’t formally record when an out-of-town agent represented a buyer in a deal. So we took Scouting Report down.”

Kelman also said, “I still think the folks most violently opposed to Scouting Report didn’t hate it because it was wrong but because it was right. I know that consumers loved it and now they can’t get it anywhere else. And I still believe that brokers should be the ones to tell regular folks how agents have performed in different neighborhoods, because we’re the only ones with reliable data.”

Kelman says that in retrospect, the program would have worked better if it had been done through their partners. While each market is different, many local associations offer Realtor performance data through the MLS for public consumption so long as it is through an active broker and the broker is in compliance with all of the local association’s business rules.

Kelman falls on the sword

In a letter to employees, Kelman said, “We have to account for what happened over the past week as a failure, and try to understand how we can do better,” Kelman said. “Obviously, it’s my fault. I’ve thought a lot about how hard folks worked to pull this off. I wish you’d had a better leader in me. But the lesson we should draw is to be more thoughtful about making a risk pay, not more cautious in avoiding the risk altogether.”

Sword, meet Glenn Kelman.

Kelman is known for being a rebel, a pioneer and ultimately a geek, a combination of traits that form a leader that doesn’t make excuses and is hard on himself, a leader that takes credit for ideas whether they are good or bad. I personally haven’t always been kind to Kelman, but the way he fell on the sword over this topic is not only admirable, it is a lesson for all leaders to walk away with- no issues were skirted or repackaged as PR spin, coders weren’t blamed, marketing wasn’t thrown under the bus, MLSs weren’t supposed to take the fall for how data is reported, and members weren’t blamed for being complainers. Kelman didn’t have to fall on the sword, but his doing so sure takes the wind out of his critics’ sails.

An admirable try at the impossible

After trying a national performance data report for consumers, it proved to be too complicated and rather than let it limp along and use up company resources, the plug was pulled in under a week.

After Kelman took credit for the fallen project, he reiterated to employees (and consumers as well as the industry) that risk taking is in their DNA. “There are all sorts of projects that fail at any corporation for a different and less conspicuous reason, because the risk was measured out in teaspoons and the idea was compromised beyond recognition and nobody made decisions and the thing had absolutely no personality and nobody really cared in the end whether it was good or bad — or even knew that it existed. The reason most people give up on a great company like Redfin is because it stops making decisions and stops taking risks. They give up because the company loses its gonads and its heart and then its soul.

“To which I say nuts. That wasn’t the problem here, and The Great Pumpkin willing it never will be. One of our values is to be fearless: bet big, tinker constantly, fail fast, measure results. If you see people who worked on Scouting Report don’t BS ‘em and say the first release was a triumph — man oh man it wasn’t — but maybe thank them for their fearlessness all the same. In the end it’s that spirit that makes me sure we’ll win.”

Did the Scouting Reports hurt Redfin’s bottom line?

Because Redfin is a company, not a non-profit charity for the good of the industry, the real question is how did this impact business at Redfin? Did business fall flat? Did investors threaten to pull out? Did they lose clients or did they really just put the real estate industry into a tizzy?

In response to a GeekWire.com blog on the topic stating that “the series of blunders around Scouting Report appears to be taking a toll on the online brokerage service,” Kelman said, “I certainly don’t think the feature is, as you claim, “taking its toll” on Redfin’s overall business. Had you interviewed me about this, I’d have told you the feature has had no impact yet on our revenues or profits, and it has increased traffic. Consumers like it.”

Kelman alluded to the data inaccuracies having the potential to hurt Redfin’s credibility in the long run. We suspect that no traditional real estate brokerage has the time or ability to ensure accuracy and police a system like this without developing an entire division devoted to it. Does Redfin have the wherewithal to do this? Sure. Will they? The concept could be reformed and rise from the ashes like a phoenix, especially given that he refers to the pulled project as “Scouting Reports 1.0” with the quiet implication that there could be a 2.0 or a 3.0… we do not believe the reports are permanently gone from their ecosystem, especially in light of supporters urging Kelman to forge ahead.

Kelman’s not down and their wallets didn’t empty. The company took a chance at doing something on a national scale that had only been tried locally, but this isn’t their first rodeo at trying new things. They got a lot of press about the Scouting Reports and in some circles, any press is good press. We believe that Kelman has learned from their over-enthusiastic past that they will get further if they work with the industry rather than against it (which they did with the Scouting Reports), he learned from making boisterous claims in the past to tone things down just slightly while keeping them exciting for their like-minded consumers (which he did with his letter to employees that he made public), and ultimately, as a geek, Kelman is a risk taker and tinkerer… we don’t think this is the last we’ve heard of Scouting Reports.